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Digital tax to take effect in Italy on Jan. 1

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A digital services tax is set to take effect in Italy on Jan. 1 as policymakers in the U.S. raise concern about these types of taxes on tech giants.

Italy’s parliament last week passed a 3 percent tax on certain digital revenue for companies that have more than 750 million euros in global revenue and at least 5.5 million euros in revenue in Italy, according to The Wall Street Journal.

Italy’s adoption of a digital tax comes after France enacted a similar measure this year. Several other countries are also considering adopting this type of tax, seeking to raise revenue from companies that have many users in their jurisdictions but pay little in taxes there.

But major U.S. tech companies — such as Facebook, Google and Amazon — as well as American policymakers on both sides of the aisle strongly oppose other countries acting unilaterally to enact digital taxes, arguing that such taxes unfairly target American businesses.

Earlier this month, the Trump administration proposed tariffs of up to 100 percent on $2.4 billion of French products in response to the French tax. U.S. Trade Representative Robert Lighthizer said at the time that the administration was also looking into whether to open investigations into digital services taxes in Italy and two other countries.

The U.S. and other countries in the Organization for Economic Cooperation and Development have been participating in discussions in an effort to reach a consensus for a framework to address challenges of taxing the digital economy. But Treasury Secretary Steven Mnuchin earlier this month raised concerns about ideas being considered as part of the talks.

Tags Robert Lighthizer Steven Mnuchin
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