Yesterday the story about Rockstar North and their alleged tax malfeasance made the rounds. During the years of 2009 to 2018, it’s reported that Rockstar North—the Grand Theft Auto developer based in Edinburgh—claimed about 40% of the total claims for this fund within the games industry in the UK over that same period. All while pulling in pulling in millions upon millions annually through their monster hit, GTA 5.
“The Video Games Tax Relief was designed to help developers of games with a cultural content that would struggle to sell in the international market. The fact that such a large amount of that relief is going to the developers of Grand Theft Auto clearly shows that the relief is not working as intended,” said director of Tax Watch UK George Turner when pointing out the potentially problematic use of UK tax subsidies by Rockstar.
Rockstar themselves have now responded. “The UK’s program to support the growth of a broad range of creative industries through tax relief is a proven success. The program has directly resulted in Rockstar Games significantly increasing its investment in the UK, creating well over 1,000 highly skilled and long term jobs across London, Lincoln, Yorkshire and Scotland,” said their statement. “This investment and the success of British video games supported by the program not only significantly contributes to the economy, and to UK tax receipts, but also helps solidify the UK’s position at the forefront of video game development well into the future.”
You’ll notice that in all of that, there’s no outright admission of the problematic nature of soaking up the biggest individual share of the tax relief.
The video game industry in the UK has employed roughly 20,000 people or more every year since growth began in 2013. From another angle, the entire UK game industry contributed £3.8 billion to the UK economy in 2018. Take-Two’s market cap is £13.1b; over the period in which Rockstar North was claiming relief (and making an estimated operating profit of £4b), the company dispersed £3.4b in executive bonuses. By the way, that’s about 10% of the yearly total UK games industry over the course of those 9 years on average.
Now look at these numbers, and tell me how a company that represents less than 5% of the UK’s core games industry is somehow more deserving of tax breaks because they happen to be lucky enough to have a franchise they can milk through microtransactions in GTA Online.
UKIE, the non-profit trade association for the video game industry in the UK, also responded with the same tone. Which basically means that they’re not actually addressing the core claims of UK Tax Watch, instead just defending it with the tired old “wealthy job creators deserve billions in tax breaks” line.
According to UKIE, Rockstar North offers “great return on investment for the taxpayer,” continuing, they pointed out the necessity of tax relief. “Video Game Tax Relief (VGTR) is a forward thinking policy that shows the UK understands the significance of games as a leading creative industry. We know that VGTR delivers a great return on investment for the taxpayer. For every £1 invested into the games industry via VGTR, it pays back £4 in gross value add into the economy,” read the UKIE statement.
“But even more importantly, VGTR directly supports 4,320 high productivity full time jobs in game development roles—nearly a third of our entire development workforce—across the country. This helps businesses based everywhere from Dundee to Brighton to play on the global stage, while allowing local communities to benefit from great jobs fit for a digital age. The UK enjoys a global reputation for creative excellence in game development. Now is the time to continue to support an industry that drives inward investment, exports globally and provides a world beating showcase of the skills the UK has to offer,” the statement finished with.