Sony, Sega and Warner have been exploiting the UK’s Video Games Tax Relief to avoid paying millions in taxes – report

By Sherif Saed
2 October 2019 12:53 GMT

Three video games industry giants have reportedly been relying on the UK’s VGTR to avoid paying millions of pounds in corporate tax.

An investigation by The Guardian into the UK’s Video Games Tax Relief (VGTR), intended to allow smaller game developers to claim back up to 20% of certain costs, has revealed that it’s mostly been benefiting the biggest players.

The VGTR was designed to also reward games that advocate British culture and art, with titles being scored on a number of metrics. Unfortunately, the report found that much of that money ends up at massive publishers. In fact, the majority of the relief’s funds were claimed by companies not based in the UK.

Sony has claimed almost £30 million in corporate tax relief, with Sega not too far behind at £20 million. Warner Bros. owner Warner Media is well ahead of the pack with £60 million of tax relief rebate, claimed over the years. The bigger claims, amounting to around £500,000 per claim, were all submitted by large-scale publishers.

Despite being in the minority of the overall total number of claims, the big ones eat up around 80% of the total relief, according to the investigation. More than half the claims were made for less than £50,000, which grants smaller developer an average total of just £10 million of the £324 million total.

This is the second time in three months a report has found that large video game publishers have been skirting some or all UK corporate tax laws. In July, think tank Taxwatch found that GTA maker Rockstar has claimed £42 million in tax relief from the VGTR, and paid no corporate tax for nearly ten years.

The issue is not unique to the just the UK, nor the video games industry at large. A two-year-old report by journalist Jesse Frederik revealed how America’s biggest companies avoid paying taxes. Frederik’s investigation also included the names of mega-publishers like Activision.

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