Rockstar and Ukie have responded to a Taxwatch UK report that claims the Grand Theft Auto 5 developer received £37.6 million via the UK’s Video Game Tax Relief fund in a single year.
As reported by VG24/7, yesterday Taxwatch revealed that during the 2018/2019 financial year, Rockstar was granted the largest claim for relief ever made, accounting for 37 per cent of “all claims made by the UK video games industry in that year” and taking its total relief to £80m since the tax scheme was introduced.
It also means Rockstar has paid no Corporation Tax in the UK for the fourth consecutive year.
According to HMRC’s latest Creative Industries Statistics, over 1,000 claims have been made against VGTR since its introduction in 2014. UK trade body for the UK’s games and interactive entertainment industry, Ukie, stated 1,110 claims have received a total of £324m in tax relief to date, which has “supported £2.6bn investment in British content, highlighting the invaluable government and public support provided by the scheme”.
To qualify for relief, games must pass a British Film Institute cultural test in order to qualify for tax relief in the UK, but the tax tank maintains video games tax relief was designed to help smaller producers of “culturally British” games and believes it was not designed for the international market.
To establish a “significant contribution to British culture”, games must satisfy a number of criteria and are awarded points for elements such as British characters, or British settings. Despite being set in the fictional Los Santos, a city modelled on Los Angeles in California, for example, Grand Theft Auto V nonetheless qualified as a culturally British video game for this tax break in September 2015, reportedly after the game had already recorded more than £3bn in sales. The certification allegedly allowed the producers of the game “to claim tax relief on production costs”. When eligible, VGTR permits developers to claim back up to 20 per cent of production costs – or 25 per cent, if it’s a loss-making company.
In response to the report, Rockstar says these tax reliefs have allowed Rockstar to create over 1,000 jobs here in the UK.
“The UK’s program to support the growth of a broad range of creative industries through tax relief is a proven success,” began Rockstar’s statement. “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.
“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,” a Rockstar spokesperson added.
UK trade body organisation Ukie also responded with its own statement, insisting VGTR is a “forward-thinking policy” that “delivers a great return on investment for the taxpayer”.
“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,” it reads.
“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.”
“VGTR could be better, maybe a lower cap could be introduced so that the amounts paid to the very top tier are somewhat reduced,” wrote MCV/Develop’s own Seth Barton last year.
“Tax relief may not be perfect, but the halo effect of having creative businesses such as the games industry in the UK are huge. The fact that there are jobs in the industry on offer in the UK is a motivating factor for innumerable children learning technology skills,” he added.