MPL, under tax pressure, lays off half its workforce

Abhishek
August 10, 2023
5:16 am

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Indian gaming platform Mobile Premier League, also known as MPL, is laying off 350 employees due to a 28% tax imposed by the Indian government on online gaming companies. These 350 employees represent half of MPL’s workforce in India.

MPL reworks its operation costs

For those uninitiated, the Indian government announced last month that it will impose a 28% tax on funds that online gaming companies collect from customers starting October 1. The new rule will increase the company’s tax burden by 350%-400%, MPL CEO Sai Srinivas said in an internal memo shared with its employees, adding that the company is cutting down on its costs related to their server and office infrastructure. As a result, MPL had to strike off 350 of its employees.

“As a business, one can prepare for a 50 per cent or even a 100 per cent increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions,” PTI quoted Srinivas as saying in the circular. “However, despite this, we will still have to reduce our people-related costs. Regrettably, we will have to let go of around 350 of you. This has been a heart-wrenching process because it impacts a lot of our friends and colleagues,” Sai added.

As for the response towards the news of the tax, online gaming companies are concerned that this change will negatively impact the sector in India, causing players to turn to offshore platforms to avoid higher taxes. The Federation of Indian Fantasy Sports (FIFS) has stated that this could cause “irreversible damage,” while a survey conducted by the Esports Players Welfare Association (EPWA) found that 61 out of 100 online gamers may stop playing altogether.

Broadband India Forum (BIF), a policy forum and think tank, believes that 28% GST will be tough on online gaming. It states that the changes will dampen the industry that has the potential to generate massive revenue. Multiple companies and investors in the sector have made repeated appeals to the government to reconsider the new tax rules.