Italy imposes digital taxes on Internet giants, which may further exacerbate trade tensions between Europe and the United States

Source: People's Network Time: 2020-01-03

On January 1, Italy began to levy 3% of its cared turnover as a digital tax from large technology companies. This policy applies to technology companies with annual global revenues of more than 750 million euros and digital service revenues in Italy of more than 5.5 million euros. The Italian media estimates that this is expected to bring Italy 600 million euros in taxes every year. Some analysts believe that following the French decision to levy a digital tax in 2019, this new tax passed by the Italian parliament at the end of December last year is conducive to safeguarding the EU’s digital sovereignty, but due to opposition from the United States, it may further intensify trade between Europe and the United States Tension.

For a long time, US, Internet giants such as Google, Facebook, and Amazon made huge profits in Europe, but only paid very little tax, which made Italy and other EU member countries unhappy. In March 2018, the European Commission announced a legislative proposal that any EU member state can tax the profits generated by Internet business that occurs in its territory. In July 2019, France was the first to pass a bill to impose a digital tax on large Internet companies, and then the United States announced plans to impose high tariffs on French imports of wine and cheese worth US$2.4 billion as a retaliatory measure against this tax. Digital taxes have become one of the triggers for trade disputes between the EU and the US.

Most European countries and EU officials support the collection of digital taxes. On the one hand, they deal with some Internet giants' tax avoidance by transferring profits to low-tax countries in Europe. The European Union believes that in the era of the digital economy, there are loopholes in the taxation system for Internet companies, and tax reform should be promoted; on the other hand, the country’s fiscal pressure should be eased. Statistics from the European Commission show that the actual tax rate to be paid by traditional industries in the European Union is 23%, compared with an average of 9.5% for large technology companies. European public opinion believes that the levy of digital taxes is conducive to safeguarding the EU’s digital sovereignty. The pilot test of France and Italy has promoted the follow-up of other European countries. The United Kingdom plans to introduce a digital service tax on Internet giants in April 2020. A digital tax proposal has also been launched.

Italian Minister of Economy and Finance Roberto Gallitelli said, \"The imposition of digital taxes is a measure in line with the international trade order.\" But this measure triggered a fierce response from the US According to Ansha News Agency, the US Trade Representative Office will hold a hearing from January 7 this year to discuss countermeasures. Once \"digital tax\" began to be implemented, the US Internet industry was hit the hardest, with Google, Apple, Facebook, Amazon and other US Internet giants bearing the brunt.

The US \"Wall Street Journal\" commented that in recent years, the economic and trade conflicts between the United States and Europe have become increasingly acute, and the two sides have serious differences on issues such as aviation subsidies, auto tariffs, and World Trade Organization reform. The introduction of a digital tax in Italy may exacerbate trade tensions across the Atlantic.