rockstar games, inc. accused of tax avoidance in the uk

Rockstar Games, Inc. Accused of Tax Avoidance in the UK

The industry of video game provides myriad hours of fun to game lovers. On the other hand, the business side of this industry is quite messy. Since, the American video game publisher, Rockstar Games, Inc. has been accused for tax avoidance. Rockstar operates as a subsidiary of Take-Two Interactive Software, Inc.

According to TaxWatch UK, the company has not paid tax from 2009 to 2018. Even though the company achieved lifetime sales of around 6 bn US$ through Grand Theft Auto V. The estimated operating profit was around 5 bn US$. In fact, the company has claimed around 51 Mn US$ in tax credits. The developers and senior managers of the company has shared bonus pool of 3.4 bn US$. Tax relief on video games was designed to support local game producers with a cultural content. The smaller producers struggle to sale in the international market. In 2014, the government of the UK introduced “Video Games Tax Relief” in order to support small and medium-sized game producers of “culturally British.”

The Grand Theft Auto V was based on fictional depiction. The depiction is based on gangland California. The game was developed and designed in the UK by Edinburgh-based Rockstar North Limited. In September 2015, the video game was granted “culturally British” video game certification by the British Film Institute. Since the game recorded more than 3 bn US$ sales. The company could claim relief on tax of production costs due to the certification. The tax credit claimed by the company was equivalent to 19% of overall tax credits paid to the video games industry by the government. The TaxWatch has asked Her Majesty’s Revenue & Customs (HMRC) to investigate. It is expected that HMRC will be investigating the tax structure of Take-Two Interactive and Rockstar Games. The company had sold around 110 Mn copies of Grand Theft Auto V by May 2019. It is believed that the GTA V will be the most commercially successful game ever.

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