Rockstar Games Accused of Evading Millions in Corporate Taxes

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Rockstar Games Accused of Evading Millions in Corporate Taxes

A new report from Tax Watch U.K. has accused GTA V and Red Dead Redemption 2 developer Rockstar Games of avoiding paying millions in taxes between 2009 and 2018, as GameSpot points out.

In the investigative piece, Tax Watch U.K. concluded that the AAA developer paid zero corporation tax in the United Kingdom during the development of their two most recent titles, even though Grand Theft Auto V’s lifetime sales have reached around $6 billion (and that number is still growing rapidly, thanks to GTA Online and their latest casino-centric, microtransaction-riddled gameplay update).

That’s not where the accusations end, though—Tax Watch U.K. also claimed that Rockstar North, the company’s satellite studio based in Edinburgh, Scotland, claimed £70 million ($85.16 million USD) in tax credits over a ten-year stint. Tax Watch U.K. says that the Take-Two-owned Rockstar Games were able to pull that off by listing its total profits outside of the U.K. and ultimately declaring a net loss within their U.K. assets for the past decade.

Tax Watch U.K. ended the report with a final statement on the matter:

The situation is absurd. The large amounts of subsidy that Rockstar North has been able to claim from the U.K. government demonstrates that the videogames tax credit system is not working as intended. The government should hold an immediate review into its effectiveness.

We do not believe that this division of profits can be justified under the so-called ‘arm’s length’ standard found in international tax law. There is no evidence that HMRC has challenged this set-up or that Take-Two or any of the individuals named in this report has acted illegally. However, it is open for HMRC to challenge the allocation of profit under the transfer pricing system and we urge them to investigate this case urgently.

Grand Theft Auto V, with its total amount of copies sold (almost 110 million), is said to be one of the most successful and profitable entertainment products to ever hit the market (that includes film, music, etc.).

Rockstar has yet to make any public comment concerning the tax evasion accusations made by Tax Watch U.K.’s report, which you can read in full here.