Italy to focus impact of web tax on big tech, shielding small firms

ROME : Italy will focus its domestic web tax on big tech companies while shunning small and medium-sized enterprises (SMEs) and publishing groups, policymakers said on Wednesday.

The move comes despite recent renewed calls from the United States for the Italian government to scrap the scheme.

In 2019, Rome introduced a 3 per cent levy on revenue from internet transactions for digital companies with annual sales of at least 750 million euros ($788.40 million) if at least 5.5 million are made in Italy.

As part of the budget bill, the Treasury tried to remove these floors for the tax to be applied, in a move critics said would be a blow to smaller companies.

Economy Minister Giancarlo Giorgetti has said broadening the scope of Italy’s web tax could help the government avoid clashes with the United States, which considers the scheme unfairly discriminatory as it mainly targets U.S. tech companies such as Meta Platforms, Google and Amazon.

However, after skirmishes with the co-ruling Forza Italia party, the government is leaning towards reinstating the 750 million euro revenue floor, a government official and some lawmakers said.

Rome also wants to cut the IRES corporate tax for companies that hire and invest under certain conditions.

The measure has an estimated cost of around 400 million euros, which the Treasury plans to cover by seeking an additional contribution from banks and insurers, lawmakers added.

Italy expects to raise more than 5 billion euros from the financial sector over the next three years through a package of measures already included in Rome’s 2025 budget.

($1 = 0.9513 euros)