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Italian 'Digital Tax' From 2017: Renzi

by Ulrika Lomas,, Brussels

16 September 2015

During an Italian television interview on September 15, Italian Premier Matteo Renzi has confirmed his tax-cutting intentions, but also indicated that his Government intends to impose a "digital tax" from 2017.

Early in 2014, Italy had to cancel a previous attempt to introduce the so-called "Google Tax" that would have required Italian persons acquiring internet advertising services to do so only from persons registered for value added tax in Italy. The European Commission then warned Italy that the provision would breach European Union (EU) laws.

However, Renzi has now stated that, having waited for an equivalent EU tax to be agreed, and assuming that there would be no concrete EU action by that date, his Government would take definitive action on a digital tax from the beginning of 2017.

"The big players in the global digital sector," he said, "have a business model in which they do not pay taxes in the places where they do business." Italy would therefore have to "structure a digital tax that will approach the matter from a different direction [from the previous Google Tax] – to make tax payable in the location where transactions and agreements are completed. We do not expect to collect huge amounts of revenue from such a tax, but it is a question of justice."

During the interview, Renzi also reconfirmed that the 2016 Budget will not contain any tax increases, and defended the intended elimination of local taxes on primary residencies in the same Budget.

The cut to property taxes would cost only EUR3.5bn (USD3.9bn), he added, and the Government intends to fund it by using the flexibility allowed to a EU member state that is undertaking reforms, as long as its fiscal deficit remains within three percent of its gross domestic product. Renzi added that the Government has calculated that it has EUR17bn available under that rule, but that "we will not use it all."

TAGS: tax | business | value added tax (VAT) | sales tax | property tax | fiscal policy | commerce | budget | internet | e-commerce | Italy | tax breaks | European Union (EU) | services | Europe | Tax

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