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Washington threatened tariffs against EU digital taxes

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U.S. commerce secretary to meet Italy PM this week

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Italy to raise corporate taxes to finance 2025 budget

By Giuseppe Fonte

ROME, Oct 7 (Reuters) - Italy is considering ways to

increase revenues from its digital services tax as part of its

2025 budget, two officials said, although the government is

concerned about retaliation from the United States, where most

of the tech giants affected are based.

Washington has threatened tariffs against unilateral digital

services taxes in Europe such as the Italian levy, which raises

almost 400 million euros ($439 million) per year and applies to

Meta Platforms Inc ( META ), Google and Amazon ( AMZN )

.

U.S. Commerce Secretary Gina Raimondo will be in Rome this

week for a meeting of ministers from the Group of Seven (G7)

wealthy democracies, and will meet Italian Prime Minister

Giorgia Meloni on Oct. 10.

The officials, who asked not to be named due to the

sensitivity of the matter, said the Treasury could revise the

tax by increasing the number of companies that have to pay it or

by increasing it for firms already targeted.

Italy's 2019 budget introduced a 3% levy on revenue from

internet transactions for digital companies with sales of at

least 750 million euros, at least 5.5 million of which are made

in Italy.

The tax was due to be scrapped following approval of the

first pillar of a global minimum tax aimed at reallocating

taxation rights on about $200 billion of corporate profits to

the countries where the companies involved do business.

But that international legislation has never come into

force, having become bogged down by divisions between the U.S.,

India and China, and despite Italy's effort to revive talks

under its G7 presidency this year.

An agreement between the U.S. and five EU countries

including Italy that resulted in a freeze of Washington's

threatened tariffs formally expired in June, although the U.S.

has not since acted on its previously announced plans.

REVENUE HUNT

Treasury Junior Minister Lucia Albano said last week the

government wants to intervene in distortions that legally allow

companies including e-commerce groups to pay less than they

should.

Italy will announce later this month a 2025 budget plan with

stimulus measures it has indicated will be worth around 25

billion euros, mainly related to cutting income taxes and social

contributions.

Under the plan, the government is expected to widen next

year's budget deficit to 3.3% of gross domestic product from an

estimated 2.9% based on current trends, and would therefore

borrow an extra 9 billion euros to fund the package.

The rest is expected to be financed through a combination of

higher fiscal revenues and spending cuts.

Options being studied to collect more revenues include

raising excise duties on diesel and eliminating some tax breaks

available to companies regarding the main corporate tax, IRES, a

separate official said.

Albano also said Rome was looking to review tax rules on

stock options aimed at remunerating managers and banks' tax

credits stemming from past losses, or so-called deferred tax

assets (DTA).

($1 = 0.9111 euros)