Zynga seeking SF tax deal

FarmVille and CityVille maker reportedly threatening to leave San Francisco unless a stock-option payroll tax exemption is granted.

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According to a Bay Citizen report, San Francisco has a problem. Zynga, the creator of the wildly popular FarmVille and CityVille games, is thinking of pulling up stakes from the City by the Bay and moving to Silicon Valley. The reason? The privately held company objects to a San Francisco tax law, several anonymous sources told the Bay Citizen.

Zynga might head south if it can't get a San Francisco tax law exemption.
Zynga might head south if it can't get a San Francisco tax law exemption.

Zynga's threats to relocate were reportedly prompted by San Francisco's offer of generous tax breaks to Twitter. Those grants are contingent on the microblogging service relocating to the city's blighted mid-Market Street area. Zynga recently relocated to an office on Townsend Street, near the AT&T Park stadium.

Zynga's main objection to staying in San Francisco is the city's law that would tax employee stock options. The casual game giant, which has an estimated worth of some $10 billion, is expected to go public soon, which would mean it would have to pay taxes on its 1,200 employees' options. According to city officials, Zynga has communicated that such taxes would be prohibitively expensive, and it would rather turn its SF office into a call center and head south than pay them.

In a statement, Zynga said the following: "We are looking at a variety of options to grow the company in the Bay Area, and as part of that, we are in serious discussions with the city. It would be premature to comment on those conversations at this time. We are encouraged that the city is engaging with us on this issue."

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