Italian Government Wants To Force Online Companies To Pay More Tax

The largest party in Italy’s coalition government has proposed raising about €1 billion for the budget through a new law that would force companies like Google and Amazon to pay more tax in the country.

Dubbed the “Google Tax”, the measure would require online businesses that sell or advertise in  Italy, to use services that are registered and taxed in the country.  It has been criticised for being unrealistic, but is supported by the leadership of the Democratic Party – the dominant political force in the current coalition.

Solving budget problems

According to Reuters, the proposal aims to tax large companies by legally forcing them to use local advertising agencies and other online services, rather than those registered in countries with attractive tax climates, like Luxemburg or Ireland.

It was drafted by the lower house budget committee chairman Francesco Boccia, who said it was unacceptable that online purchases made by Italians were raising the profits of companies that have no interest in developing the Italian economy.

This is not the first time Italian politicians have attempted to claw back taxes from large online businesses, but so far no such initiatives have made it into law. Critics say that the latest proposal is not realistic, and does not recognise how online businesses work.

If Boccia’s proposal is accepted, it could come into force when the government approves the new budget for 2014. But to do this, the Democratic Party has to achieve the considerable task of convincing its coalition partners – the liberal-conservative People of Freedom party, led by Silvio Berlusconi.

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