Italy-US: no web-tax agreement reached between the two countries

Italy and the United States have signed a new agreement to extend the truce on the web tax, Italy’s 3 percent tax levied on the turnover of tech giants, as reported by Italiaoggi.

In a statement released yesterday by the Washington government, the expiration date of the joint agreement also signed with Austria, France, Spain, and the United Kingdom in October 2021 is postponed to June 30, 2024.

The agreement provides transitional terms for the transition from the current national web taxes toward the new OECD solution that will allow digital giants to be taxed through common principles. However, given the delays in working out the technical details of the first pillar of the OECD international tax reform, precisely because of the United States, an extension was necessary to avoid any foreseeable trade wars.

“In light of the revised timetable for the adoption and signing of the multilateral first-pillar convention, the participants agreed to extend the political compromise established in the October 21 joint statement until June 30, 2024,” reads the updated joint statement. On Dec. 18, 2023, the OECD issued a statement “calling for the finalization of the text of the multilateral first pillar convention by the end of March 2024 with the aim of holding a signing ceremony by the end of June 2024.” Yesterday’s announcement thus also marks a turning point in the OECD negotiations on the first pillar for new rules for international taxation of tech giants: either a multilateral decision will be made or a regulatory vacuum will open, causing new instability.

According to the 2021 agreement between Italy and the U.S., web taxes will be in place as long as the first pillar is effective, and a tax credit will be offered to repay the amount of tax collected in excess had the OECD agreement been implemented earlier. The United States, for its part, agreed to drop the retaliatory duties it had enacted and temporarily suspend them against the five countries.

As reported by ItaliaOggi in late December, Economy and Finance Minister Giancarlo Giorgetti stressed the urgency of extending the turnover tax on digital giants, given the inability of the United States to implement the two-pillar OECD agreement agreed in October 2021.

In March 2021, the United States threatened 25 percent duties on Made in Italy fashion products amounting to 120 million euros. In a detailed list, retaliation on clothing, bags, shoes, and accessories was mentioned. But perfumes, glasses and lenses, caviar, and anchovies were also under threat.