Italy’s council of ministers has approved a new tax on digital companies as part of its 2020 draft budget, a move that responds to the OECD’s recent proposals to tax multinational businesses. The new measure will require companies such as Google, Amazon and Facebook to pay a 3 percent levy on internet transactions with a view to raising around EUR 600 million a year.
Italy originally set out plans for a web tax in 2018 under the previous coalition of the 5-Star Movement and the far-right Lega, but that government collapsed in August this year and the levy was never implemented. The new coalition government of prime minister Giuseppe Conte has now pushed through the levy as part of a package of alternative fundraising measures to avoid having to increase sales taxes.
However, Italy’s plans are likely to draw a reaction from Washington, which has repeatedly said the levy unfairly targets US firms. According to a Reuters report, a senior US official said President Donald Trump was ready to threaten retaliation following a meeting Italian President Sergio Mattarella. France and the US eventually reached a compromise in August to end a standoff over a French tax on big internet companies.
