Italy to levy web tax on digital giants from 2020

News:Italy has approved a new tax on digital companies including U.S. tech giants as part of its 2020 draft budget.


Why is digital tax?

  • The digital tax aims to stop multinationals from avoiding taxes by setting up headquarters in low-tax European Union(EU) countries.
  • This means that firms end up paying very little tax in countries such as France or Italy despite having lots of customers there.

About digital tax by Italy:

  • The digital tax which will be starting next year in Italy will oblige global technology firms to pay a 3% levy on internet transactions.
  • The tax would be applied to companies with sales of over 750 million euros of which at least 5.5 million euros come from services provided in Italy.
  • This digital tax is similar to one applied by France which had also levied a 3% tax on these companies.