By Giuseppe Fonte
ROME (Reuters) – Italy has extended its domestic tax on digital services to small and medium-sized enterprises (SMEs) to try to overcome U.S. objections that the levy is discriminatory, Economy Minister Giancarlo Giorgetti said on Thursday.
Addressing lawmakers on the government’s 2025 budget, Giorgetti said other European Union countries were likely to so the same to try to avoid retaliation.
Washington has threatened tariffs over unilateral digital taxes in Europe, as they mainly target U.S. tech companies such as Meta Platforms, Google, and Amazon.
Italy in 2019 introduced a 3% levy on revenue from internet transactions for digital companies with annual sales of at least 750 million euros ($809 million) if at least 5.5 million are made in Italy.
Now, as part of the government’s 2025 budget, the Treasury plans to remove these minimum conditions, aiming to raise 51.6 million euros on top of the current revenue of 400 million.
Confirming an earlier Reuters report, Giorgetti said that increasing the number of companies forced to pay the tax was aimed at avoiding clashes with Washington.
“This eliminates the ‘discrimination’ element underlying the U.S. complaint”, Giorgetti said. “I think others will emulate us.”
Sources told Reuters this week that the United States had renewed calls for Italy to repeal its web tax.
During Donald Trump’s first term as U.S. president, Washington said it was prepared to counter the Italian levy.
Now that Trump has won a second term, Italy’s web tax is likely to remain a sensitive issue for Prime Minister Giorgia Meloni, an Italian government official said.
Complicating the matter, several lawmakers in Italy’s governing coalition oppose the Treasury’s proposed changes, arguing the tax should keep focusing on U.S. Big Tech.
They are planning amendments to the budget bill to maintain revenue floors while hiking the current 3% tax rate.
“Such action could trigger retaliation from the U.S.,” Giorgetti warned.
Italy’s tax was due to be scrapped following approval of the first pillar of a global minimum tax aimed at reallocating taxation rights on about $200 billion of corporate profits to the countries where the companies involved do business.
However, that international legislation has not come into force, having become bogged down by divisions between the United States, India and China.
Giorgetti said the stalemate on the first pillar was unlikely to be overcome by the end of 2024 and called for a common EU approach over the matter.
($1 = 0.9276 euros)
(Reporting by Giuseppe Fonte; Editing by Mark Potter)
