Interactive entertainment and gaming platform WinZO is making its foray into the Brazilian market as the Indian government’s introduction of a 28% goods and services tax (GST) significantly impacts the domestic gaming industry. WinZO’s expansion into Brazil comes at a critical juncture for India’s gaming ecosystem, which is grappling with the challenges posed by a 400% GST increase, potentially jeopardizing the viability of content and intellectual property (IP) creators in their early stages.
WinZO’s expansion into Brazil serves as a strategic move to diversify its revenue streams in response to the new GST regime, which could lead to a 300-400% increase in its tax obligations. Alongside its international expansion efforts, WinZO has committed to investing $25 million to foster growth and develop the gaming market in Brazil.
WinZO’s initiatives include supporting 100 partner game developers in exporting games such as carrom, chess, and car racing to the Brazilian market. Furthermore, WinZO is set to launch and represent the inaugural India Pavilion at the Brazil Game Show, which stands as the largest gaming event in Latin America.
India’s finance ministry announced the implementation of amended GST law provisions, slated to take effect on October 1. These provisions specifically target e-gaming, casinos, and horse racing, making it mandatory for offshore online gaming platforms to register in India and comply with domestic tax laws.
In response to these regulatory changes, a consortium of prominent investors, including Peak XV Partners, Tiger Global, DST Global, Bennett, Coleman & Company Limited, Alpha Wave Global, Chrys Capital, and Lumikai, wrote a letter seeking the intervention of the Prime Minister. The investors expressed concerns that the new GST regime could deter potential investments of up to $4 billion over the next 3-4 years.
The impact of the GST on gaming companies in India has already been felt, as evident from the layoffs at Mobile Premier League (MPL), a real money gaming platform. MPL recently reduced its workforce by approximately 50%, laying off around 350 employees in August. Sai Srinivas, Co-founder of MPL, attributed this downsizing to the new GST regulations targeting gaming companies. In an internal email to MPL employees, Srinivas highlighted that the 28% tax imposition could result in a 350-400% increase in MPL’s tax liability.
