Revealed: EA's Billion Dollar Off Shore Tax Tactic
Game company has subsidiaries in Bermuda, Singapore and Mauritius says NYT
More money goes walkies than your average NFL player makes in a week.
Electronic Arts has come under criticism from New York Times writer David Kocieniewski (a chap mostly known for pointing out 'disgusting games YOUR children are playing') for optimising its tax position within the city of San Francisco, and saving millions with subsidiary companies in Bermuda, Singapore and Mauritius.
Chief Executive John S. Riccitiello lobbied the City of San Francisco to drop its payroll tax last year, Kocieniewski reports. The city complied.
If a huge company like EA was to say that it was going to up and leave its current headquarters for somewhere that would offer them tax breaks, what would you expect the City to do? Cave in, of course. The City would sooner lose some tax revenue than have to deal with even more unemployed people that would be left behind if EA jumped ship. That's exactly what San Francisco did.
That's only on a local stage though. If you move a bit higher, up to the State and Federal levels, you'll see that all over America there are cities and states that are desperate for the video games industry to come and share the wealth.
According to Kocieniewski, "there are signs that more tax breaks may be in store for game manufacturers. States have been offering an escalating collection of incentives to try to attract the companies — more than 20 states now offer video game developers tax breaks to cover their wages, development and manufacturing costs."
This is bad news, not just for the USA, but for the industry worldwide. Consider the situation of developers here in the UK with reports of studios shutting down coming in almost every week. Companies exist to make profits. If there's a way that they can move to somewhere that will save them cash, they'll move. You can always find new coders and artists. It's not nice but that's business.
Perhaps the most startling revelation is that EA seems to love spreading its money about, especially in places where it doesn't even have studios. "Electronic Arts has more than 50 overseas subsidiaries, according to its recent regulatory filings, many in low-tax countries like Bermuda, Singapore and Mauritius," writes Kocieniewski. "The company has also accumulated more than $1.3 billion in profits offshore, where it will not be taxed by the United States unless it is brought back into the country."
Mauritius may well be lovely this time of year but when was the last time you heard about their burgeoning games industry? Do you reckon that cash will find its way back to the US? Nope. Us neither.
Creative accounting is a science and people are well paid to find loopholes in legislation that allow companies to find work arounds. When folks are losing jobs that they love because a multinational wants to save a few quid, that's bad enough, but when that same company 'optimises' its tax bill rather and also demands tax cuts, that begins to feel just a bit grimy.
You know when you're getting the crap beaten out of you by some camping swine on your favourite FPS? You respawn then BANG, you're dead again? You remember how annoyed you get because it's unfair? There's something wrong with the game that allows a chosen few who know the issues intimately to exploit them to their own ends while everyone else gets done over. That's what EA have done... and no-one likes a camper. They, alongside other games companies, need to play fair.
Chief Executive John S. Riccitiello lobbied the City of San Francisco to drop its payroll tax last year, Kocieniewski reports. The city complied.
If a huge company like EA was to say that it was going to up and leave its current headquarters for somewhere that would offer them tax breaks, what would you expect the City to do? Cave in, of course. The City would sooner lose some tax revenue than have to deal with even more unemployed people that would be left behind if EA jumped ship. That's exactly what San Francisco did.
That's only on a local stage though. If you move a bit higher, up to the State and Federal levels, you'll see that all over America there are cities and states that are desperate for the video games industry to come and share the wealth.
According to Kocieniewski, "there are signs that more tax breaks may be in store for game manufacturers. States have been offering an escalating collection of incentives to try to attract the companies — more than 20 states now offer video game developers tax breaks to cover their wages, development and manufacturing costs."
This is bad news, not just for the USA, but for the industry worldwide. Consider the situation of developers here in the UK with reports of studios shutting down coming in almost every week. Companies exist to make profits. If there's a way that they can move to somewhere that will save them cash, they'll move. You can always find new coders and artists. It's not nice but that's business.
Perhaps the most startling revelation is that EA seems to love spreading its money about, especially in places where it doesn't even have studios. "Electronic Arts has more than 50 overseas subsidiaries, according to its recent regulatory filings, many in low-tax countries like Bermuda, Singapore and Mauritius," writes Kocieniewski. "The company has also accumulated more than $1.3 billion in profits offshore, where it will not be taxed by the United States unless it is brought back into the country."
Mauritius may well be lovely this time of year but when was the last time you heard about their burgeoning games industry? Do you reckon that cash will find its way back to the US? Nope. Us neither.
Creative accounting is a science and people are well paid to find loopholes in legislation that allow companies to find work arounds. When folks are losing jobs that they love because a multinational wants to save a few quid, that's bad enough, but when that same company 'optimises' its tax bill rather and also demands tax cuts, that begins to feel just a bit grimy.
You know when you're getting the crap beaten out of you by some camping swine on your favourite FPS? You respawn then BANG, you're dead again? You remember how annoyed you get because it's unfair? There's something wrong with the game that allows a chosen few who know the issues intimately to exploit them to their own ends while everyone else gets done over. That's what EA have done... and no-one likes a camper. They, alongside other games companies, need to play fair.
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