Business

Grand Theft Auto developer claimed UK subsidies but paid no corporation tax - report

Posted July 29, 2019 1:50 p.m. EDT

— The developer of the smash hit video game "Grand Theft Auto" has not been paying corporations tax in the United Kingdom despite collecting millions in subsidies, according to a new report.

Edinburgh-based Rockstar North and its parent company have paid zero UK corporation tax over the past 10 years, according to TaxWatch UK. Rockstar North has meanwhile claimed £42 million ($51.4 million) in UK tax credits.

Rockstar North is a subsidiary of Take-Two Interactive Software, which is based in the United States and listed on the Nasdaq.

The company is behind some of the world's biggest video games. "Grand Theft Auto Five" has sold 95 million units, according to Take Two's most recent annual report. It's also the developer behind "Red Dead Redemption."

TaxWatch UK said that UK divisions of Rockstar helped make games that produced huge profits. But it paid no UK corporation tax and claimed credits designed to help smaller companies.

The company is not accused of doing anything illegal, TaxWatch UK stressed. But the think tank did question why Rockstar did not book more profits — and pay more tax — in the United Kingdom.

"Take-Two appears to believe that it is reasonable that close to 100% of the profit should flow to their US based parent companies and senior management," said the think tank.

Allocating more profits to the United Kingdom might have made the company ineligible for the Video Games Tax Relief Scheme, which was launched in 2014, according to the report.

"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 the think tank.

Take-Two did not respond to a request for comment.

The Grand Theft Auto series has been in existence for 16 years. It's well known for its violence and glorification of gangsters, elements that have helped to fuel their popularity as well as controversy.

The world's largest economies have been working on an overhaul of global corporate tax rules that seeks to address shortcomings via two main avenues.

The first is a framework that would help resolve questions over when tax ought to be paid, and whether it should be collected where buyers or sellers are located.

The second would ensure that multinational companies pay a minimum level of tax, thereby discouraging them from shifting profits to countries with lower levels of taxation.