US warns Italy not to introduce tax on tech giants

The United States on Monday warned Italy not to go ahead with a planned tax on American tech giants like Amazon and Google, and threatened to impose tariffs of up to 100 percent on France for bringing in a similar law.

US warns Italy not to introduce tax on tech giants
Photo: Damien Meyer/AFP

French produce, including Champagne and cheeses, could be targeted as soon as mid-January after a report from the US Trade Representative's office found the country's incoming three percent tax on global tech giants will hit companies such as Google, Apple, Facebook and Amazon.

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The US government also again warned Italy over its plan to introduce a similar tax.

Set to come into force in January 2020, the Italian policy will impose a three percent levy on he revenues earned by technology firms operating in the country, which often come from online advertising and other digital services.

But despite pressure from the US, Italy pressed ahead with introducing the policy, which is expected to bring in some 600 million euros in revenue for the Italian state every year, as part of its 2020 budget plan.

Austria and Turkey have also been warned that they could be punished by the US after drawing up similar digital tax laws.

The Trump administration's decision “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies,” US Trade Representative Robert Lighthizer said in a statement.

The latest tariff threats come after the US earlier this year slapped extra import charges of up to 25 percent on many Italian foods, including the famed Parmigiano Reggiano cheese.

READ ALSO: Trump slaps extra tariffs on Italian cheese – but not wine

The extra American tariffs, which have hit exports from across Europe, were imposed in October in an ongoing row over EU aircraft subsidies.

Photo: AFP

Under EU law, internet giants can choose to report their income in any member state, prompting them to choose low-tax nations such as Ireland, the Netherlands or Luxembourg.

The planned new three percent tax in Italy and France may not sound particularly high, but internet giants are currently thought to be paying a fraction of that amount.

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The European Commission concluded that Apple had paid an effective corporate tax rate of just 0.005 percent on its European profits in 2014 – equivalent to just €50 on every €1 million.

The European Commission has been working on an EU-wide tax on digital companies for years, but has so far failed to get unanimous support from all member states. Italy, France and several other countries have come up with their own tax laws in the meantime.

Italy's Guardia di Finanza (financial police) has also been going after tech giants in recent years, forcing giants including Facebook, Amazon, Apple and Google to pay millions of euros in disputes over profits made in the country but reported in lower-tax EU nations.


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