Italy Expands Digital Services Tax Amid U.S. Tensions

Italy has extended its digital services tax to include small and medium-sized enterprises, aiming to allay U.S. concerns over its purported discrimination against American tech giants. The move could generate an additional 51.6 million euros in tax revenue, eliminating minimum sales conditions for affected companies.

Italy has expanded its domestic tax on digital services to incorporate small and medium-sized enterprises in a bid to mitigate objections from the United States, Economy Minister Giancarlo Giorgetti announced on Thursday.

The U.S. has previously threatened tariffs in response to unilateral digital taxes imposed in Europe, which have largely targeted U.S. tech firms like Meta Platforms, Google, and Amazon.

Originally, Italy introduced a 3% levy in 2019 on revenue from internet transactions for digital companies with sales exceeding 750 million euros, provided at least 5.5 million euros are generated in Italy. As part of the country's 2025 budget, the minimum sales requirement is being rescinded in an attempt to accrue an additional 51.6 million euros beyond the current 400 million in revenue.

Giancarlo Giorgetti confirmed to Reuters that broadening the tax's reach is designed to prevent further friction with Washington, effectively addressing the 'discrimination' issue flagged by the U.S. Sources disclosed that the U.S. has urged Italy to abolish its web tax, a stance previously held during Donald Trump's first presidency. With Trump securing a second term, Italy's digital tax policy remains a point of contention for Prime Minister Giorgia Meloni's administration.

(With inputs from agencies.)