US Pressures Italy to Drop Web Tax Amid Tariff Threats

The U.S. government has renewed its request to Italy to abolish the contentious digital services tax, focusing on American tech giants like Meta Platforms Inc (NASDAQ:META), Google (NASDAQ:GOOGL), and Amazon (NASDAQ:AMZN). Despite generating less than €500 million in annual revenue, the U.S. sees this tax as unfairly discriminatory and has warned of potential tariffs in response.

Italian officials have expressed their intent to maintain the tax while awaiting the stance of the new U.S. administration following Donald Trump's declaration of victory in the presidential elections on Tuesday. Italy's current web tax was established in 2019 and imposes a 3% tax on internet transaction revenues for digital companies with global sales exceeding €750 million and generating at least €5.5 million in revenue from Italy.

Prime Minister Giorgia Meloni is considering removing minimum sales requirements in the 2025 budget; this would broaden the tax's scope and is expected to bring in an additional €51.6 million on top of the current €400 million. The Italian Treasury suggested that this adjustment would address concerns over the discriminatory effects of the tax by expanding the base of companies subject to it.

However, there are dissenting voices within Italy's coalition government regarding these changes. Some lawmakers propose maintaining revenue thresholds to continue targeting major U.S. tech firms and plan to submit amendment proposals to the budget bill. Maurizio Gasparri, a senior senator from the ruling Forza Italia party, emphasized the need to "clip the wings of web giants" and argued that focus should remain on major tech companies while considering an increase in tax rates.

This internal debate in Italy occurs during a time when the U.S. has not hidden its willingness to use tariffs as a countermeasure against what it believes to be unilateral digital taxes targeting American companies. The outcome of Italy's budget discussions and the U.S. administration's response will be closely monitored, as they could set a precedent for international tax policy and cross-border trade relations.