Italy’s Web Tax May Hit US Providers

Italy’s government is looking into levying a 3% “web tax” that targets all online transactions within the country. Some of the companies that would be hit by this tax include Google and Apple. Italy’s government mentioned the measures in their proposed budget for 2020, citing the web tax as an alternative to implementing a general sales tax on all incoming goods. The fee is slated to come into effect in January of 2020.

Massive Business Entities Targeted

While the web tax would impact the largest businesses in their enterprise operations, smaller companies don’t have anything to fear from Italy’s tax. The levy only applies to companies that have a global revenue of over $827 million, and with a digital services division that brings in over $6.1 million. The process includes the companies submitting an invoice for their estimates on how much they owe. The Italian government would then audit the figures to see how well they match with the government’s estimations. The Italian government has stated that they expect the tax to bring in as much as $661 million in revenue per year as long as the fee operates.

Not Just Italy

Another European country has followed suit with implementing a tax on digital companies. France passed a bill in July of this year that levied a 3% tax on digital items across the board. The tax is expected to affect Facebook, Amazon, and Google. The fee spawned widespread outcry from the US, but eventually, the complaints dissipated as the US government entered into talks with France, which promised to lift the tax once an agreement was reached.

EU authorities have begun looking at their existing taxation paradigm in an attempt at harmonizing these taxes across the entire region. The idea is that if the EU as a whole levies the tax, then tech giants will have to pay more. The resulting income can then be distributed equitably to all members of the EU as their needs require. The idea may meet some pushback, however. Tech companies that are trying to avoid high taxes have set up regional and international offices in countries like Luxembourg, Hungary, and Ireland. The incidence has resulted in those nations being referred to as “tech tax havens” on the continent.