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.