It has been revealed that Activision Blizzard paid no federal tax in the United States in 2018. The company, which publishes games like Overwatch, World of Warcraft, and Call of Duty, has faced criticism this year for Blizzard Entertainment’s handling of bans over Hong Kong protests and this news also threatens to damage its public persona.
A new report by the Institute on Taxation and Economic Policy names Activision Blizzard as one of several companies that didn’t pay any tax in 2018. The company had an income of $447 million in 2018 - from the sale of its games and microtransactions such as Overwatch loot boxes - but wasn’t subject to any federal income tax. The report reveals that the company didn’t just avoid paying tax, but it was able to save $243 million in tax breaks.
Activision Blizzard has been criticized for its handling of taxes before. A report by Tax Watch UK revealed that between 2013 and 2017, Activision Blizzard moved €5 billion ($5.5 billion USD) to companies in Bermuda and Barbados, two sovereignties notorious for their low taxes. The report also said that the company has subsidiaries in “tax havens” such as the Netherlands and Malta and that authorities in the UK, France, and Sweden are investigating the company. The investigation is ongoing but Activision Blizzard could have to pay $1.1 billion in taxes and penalties.
The report will do nothing to help Activision Blizzard’s reputation, which has been left in tatters over its handling of the Hong Kong situation. The company has been accused of kowtowing to the Chinese government by choosing to punish an esports player who gave support for those protesting the government in Hong Kong. Posts on its official social media, which spoke about protecting China’s “dignity” didn’t help things.
However, Blizzard is just one of few gaming companies that uses subsidiaries and tax breaks to get out of paying taxes around the world. Grand Theft Auto series developer Rockstar hasn’t paid corporate tax in the UK for 10 years and Sony was also accused of dodging taxes in the UK by using the VGTR (Video Game Tax Relief) incentive.
Source: ITEP, Tax Watch UK
