MPL To Lay Off 350 Employees Amidst GST Tax Hike

Bengaluru-based online real money gaming company Mobile Premier League (MPL) has announced plans to lay off around 350 of its employees. This move represents nearly 50 per cent of MPL's workforce and underscores the substantial impact of the tax policy change on the company's operations.

The decision was communicated to MPL's staff through an internal email sent on 8 August by the co-founder and CEO, Sai Srinivas. In the email, Srinivas outlined the challenges posed by the new GST regulation, stating that the tax burden on the company would surge by as much as 350-400 per cent. He acknowledged that while businesses can usually adapt to moderate increases in taxation, the sudden and substantial nature of this increase necessitated some difficult decisions.

Srinivas mentioned in the email that MPL had already begun evaluating ways to reduce server and office infrastructure costs, which are variable in nature for a digital company. Despite these efforts, the decision to reduce employee-related costs became a regrettable necessity.

The GST Council's decision to levy a 28 per cent tax on the full deposit value of online gaming rather than on the gross gaming revenue (GGR) came as a surprise to the industry. The gaming sector had been advocating for taxation based on GGR or the platform fee charged to users. This unexpected tax hike has prompted various stakeholders, including companies and investors, to appeal to the government to reconsider the new tax rules.

Investors within the online real money gaming industry have also expressed concerns that the taxation change could potentially lead to significant financial losses, even leading to a write-off of the substantial capital – around USD 2.5 billion – invested in the sector.