Italy has recently decided to implement a new tax on technology giants that will put a three per cent digital tax on companies like Google and Amazon. According to global figures, technology companies make over $831 million in global revenue and approximately $6 million from transactions and operation in Italy alone. This recent move comes after France had passed a similar tax earlier this year.
The Italian Parliament passed the law this week and is scheduled to come into force from January 1, the tax that Italy is planning to implement from January 1 is very similar to the one that France implemented earlier this year and similar to France is expected to undergo severe criticism fro the United States.
US Treasury Secretary Steven Mnuchin said that the US vehemently opposed this digital tax because they believed it would be discriminatory against US-based businesses and goes against international tax rules. US Trade Representative (USTR) Robert Lighthizer on December 2 while targeting France said that the service tax that has been implemented discriminates against US companies and also goes against international tax policy.
The United States plans on imposing tariffs of up to 100 per cent on French Products if France does not suspend taxes on technology companies like Google and Amazon. In addition, the US is also considering whether or not to impose Section 301 of the Trade Act of 1974. This section of the Trade Act allows the US to enforce trade agreements, resolve trade disputes, and open foreign markets to US goods and services.
The new tax law passed by Italy will require tech giants like Facebook, Google and Amazon to pay a 3 per cent levy on all internet transactions. This new tax is expected to generate 600 million euros in tax revenue for Italy. Italy is among the many European Countries that have complained about the way that tech companies generate huge revenues and pay only a few million in taxes each year.