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Italy Launches Digital Tax Consultation

Monday, June 4, 2018

Italy's Ministry of Finance is seeking stakeholders' feedback on whether to support the EU's digital tax plans, and in particular its proposal for an "interim tax" on otherwise untaxed turnover earned by certain digital economy firms.

On March 21, 2018, the European Commission released two proposals that are intended to make tax rules "fairer" for digital firms. Its preferred long-term solution is said to be a reform of corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels, through new digital permanent establishment rules. However, in the interim, it has controversially proposed allowing member states to tax turnover generated in their territory, even if a company does not have a physical presence there, where they would otherwise likely go untaxed.

The interim tax - proposed to feature a rate of three percent on turnover - would be imposed on revenues created from selling online advertising space; created from digital intermediary activities; and those created from the sale of data generated from user-provided information.

Italy's consultation will end on June 22, 2018, and is open to taxpayers, associations, companies, academics, and think tanks. The Ministry has asked that any comments be specific about the proposals released and to specific documents released by the Commission.