Italy eyes 'Google Tax' to help fix public finances

Mon Nov 4, 2013 12:31pm EST
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By Gavin Jones

ROME (Reuters) - Italy's largest ruling party has proposed legislation to raise government revenues by making it more expensive for multinational online companies like Google, Amazon and Yahoo to do business there.

A bill tabled by the center-left Democratic Party (PD) aims to raise at least 1 billion euros through a law, dubbed the "Google Tax", obliging companies that advertise and sell online in Italy to do so only through agencies with a tax presence in the country.

While its proponents see the measure as a popular way to raise revenues on profitable foreign companies, detractors say it is based on wishful thinking rather than a sound knowledge of how Internet commerce and advertising work.

The proposal would not tax the multinationals directly but would force them to use Italian companies to place their advertisements, rather than doing so through third parties based in low-tax countries like Luxembourg, Ireland or outside the European Union.

The state would benefit from tax levied on the extra income of Italian advertising agencies and Internet service providers.

The man who drafted the bill, lower house budget committee Chairman Francesco Boccia, said it was unacceptable that online companies paid taxes abroad on revenue from sales in Italy, taking advantage of lower fiscal levies elsewhere.

"We shouldn't be trying to raise resources by hiking taxes on fuel, cigarettes or small retailers while our online purchases are raising the profits of companies that have no interest in developing our economy," Boccia said on his website.

The Google Tax is the latest of several proposals by Italian politicians targeting online multinationals, including one to force them to pay their taxes in Italy, but none have been translated into law.   Continued...