United States renews calls for Italy to scrap its web tax

Rome: The United States has recently renewed calls for Italy to repeal its domestic web tax, people familiar with the matter said, saying the U.S.’ insistence increases the risk of retaliation if Rome ignores the request.

Italy intends to maintain the tax for now, waiting for the new administration in Washington to show its stance on the matter, two officials said, asking not to be named due to the sensitivity of the matter.

Donald Trump has claimed victory following Tuesday’s presidential election.

Washington has threatened tariffs over unilateral digital taxes in Europe such as the Italian levy, which applies to Meta Platforms Inc (META.O), opens new tab, Google (GOOGL.O), opens new tab and Amazon (AMZN.O), opens new tab, and raises less than 500 million euros ($538.65 million) per year.

Despite its relatively small level of revenue, the United States considers the scheme unfair discrimination because it mainly targets the country’s tech companies, the sources said.

The U.S. Treasury was not immediately available for comment.

Italy in 2019 introduced a 3% levy on revenue from internet transactions for digital companies with sales of at least 750 million euros if at least 5.5 million are made in Italy.

Now, as part of the government’s 2025 budget, Prime Minister Giorgia Meloni plans to remove these minimum conditions for the tax to be applied, aiming to raise 51.6 million euros on top of the current revenue of 400 million.

Italy’s Treasury has told Washington the removal of the revenue floors, by increasing the number of companies forced to pay the tax, would overcome U.S. objections about its discriminatory nature, one of the sources said.

However, several coalition lawmakers oppose the Treasury’s proposed changes. They argue the tax should keep focusing on U.S. Big Tech, and are planning amendments to the budget bill before parliament.

“We must trim the claws of the web giants,” said Maurizio Gasparri, a senior senator with the co-ruling Forza Italia party.

The proposal being discussed would maintain revenue floors to shield small and medium-sized enterprises while hiking the current 3% tax rate.

“An amendment like this would be the best way to get crucified by the U.S.,” the second source said.