GTA 6 developer sparks criticism with massive tax relief claims
Rockstar North, the development studio behind the Grand Theft Auto series and the upcoming GTA 6, has reportedly claimed a staggering amount of money in tax reliefs over the last decade. According to a report by The Scotsman, Rockstar used the United Kingdom’s Video Games Tax Relief (VGTR) scheme to claim £360.3 million GBP (around $454.6m USD) in tax breaks since its inception in 2015. It added that Rockstar’s claims alone amounted to over a third of the total tax relief granted to developers in the UK under the scheme in this timeframe.
Rockstar “has not paid any UK corporation tax since being accredited for the government tax break in 2015,” the outlet claimed in its report, contrasting this with the fact that the developer “has generated profits of £448 million on a total turnover exceeding £2.1 billion” since GTA 5 launched. That's around $564.9m and $2.6b respectively.
Rockstar is really living up to its games' themes, it seems.
Rockstar
A member of parliament quoted in the piece questioned why a huge studio like Rockstar was eligible for this measure, which was originally supposed to support small businesses. She said it was “costing the taxpayer a fortune” and urged the government to overhaul it.
Rockstar is owned by Take-Two Interactive, a US-based corporation to which the studio “paid dividends worth over £185m via another UK subsidiary entity,” The Scotsman wrote. That's roughly $233m that went out of the UK.
According to the UK government’s website, companies can claim VGTR if their products are “certified as British by the British Film Institute” and “intended for supply to the general public.” The companies must also “be responsible for designing, producing and testing the video game, be actively engaged in planning and decision-making, directly negotiate, contract and pay for rights, goods and services, and spend at least 25% of its ‘core costs’ on goods or services provided from within the UK or European Economic Area (EEA).”
“You can claim an additional deduction to reduce your profits or to increase a loss” under this scheme, the website states. “This will reduce the amount of any Corporation Tax you will need to pay. If you make a loss, some or all of this loss can be surrendered for a payable tax credit at a rate of 25%.”
The VGTR is set to be replaced by the Video Games Expenditure Credit (VGEC) for any game that starts production after March 31, 2025. The VGEC will offer an ever greater tax credit at a rate of 34%.
Next time you see your friends from the UK, thank them for partially financing the development of GTA 6.
It’s worth noting that Rockstar isn’t the only large developer taking advantage of such tax breaks and that the UK isn’t the only country offering them. The reason there are many large developers in Montreal, Canada, is because of government relief of 37% for the production of video games. These reliefs have turned Montreal into a hub for game development, attracting new business to the region. Germany has an official fund supporting video game developers, which contributes generously to homegrown projects.
