Italy’s centre-left Democratic Party, which is the senior partner in the country’s ruling alliance, has proposed a legislation to make internet majors including Google, Facebook, Yahoo and others to pay more taxes on their revenues generated in Italy.
The tax dubbed as "Google Tax" law, which is aimed at raising government revenues, is anticipated to raise about $1.35bn per year.
Multinational firms would not be taxed directly as per the new law, while they would be forced to collect advertising revenues through Italian firms, rather than doing so via third parties based in low-tax countries including Luxembourg and Ireland.
The proposal also calls for the internet multinationals to be taxed where they generate money, not where they wish to.
Italy lower house budget committee Chairman Francesco Boccia said that it was intolerable that online firms paid taxes abroad on revenue from sales in Italy, exploiting lower financial charge 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
Reports reveal that the proposal would be hard to make workable legislation due to the nature of electronic business, while it would slow the free trade talks between EU and the US, with two of them being planned for the following two months.
