Posted By Jessica Weisman-Pitts
Posted on March 13, 2024
Italy says global minimum tax on multinationals set to fail
By Giuseppe Fonte
ROME (Reuters) -Italy’s Economy Minister Giancarlo Giorgetti said on Wednesday he fears that a plan for a global minimum tax on multinationals is set to fail, adding this was the impression he got from attending G7 and G20 meetings.
Washington and five European countries agreed last month to extend a truce over digital services taxes for six months to buy more time for negotiations on international taxing rights over large corporations.
Italy cares about the deal as Rome this year holds the presidency of the Group of Seven major democracies and in this capacity, it is supposed to play a role in trying to revive the talks.
“I fear that the global taxation deal is going to fail,” Giorgetti said addressing a tax conference in Rome.
“I do not want to anticipate news, but during the work of the G7 and G20 summits I had this feeling that the plan will not be achieved in the desired timeframe,” he added.
Rome is concerned about two potential scenarios – a further extension of the truce over digital taxes, or in a worst-case scenario that the U.S. disengages from the talks, a source familiar with the matter said.
The global minimum tax deal is aimed mainly at U.S.-based digital giants. The first pillar of the accord aims to reallocate taxing rights on about $200 billion in profits from the companies to the countries where they do business.
The second pillar tries to ensure companies with revenue greater than 750 million euros ($820.65 million) pay a global minimum rate of 15% by allowing governments to apply a top-up tax on revenues earned in countries with lower rates.
While the second pillar is being implemented, plans to redistribute taxing rights have proven more complicated than initially anticipated, as the United States struggles to ratify them in the U.S. Congress.
The extension of the truce, announced on Feb. 15, suspended the threat of U.S. retaliatory tariffs over unilateral digital services taxes across Europe until June 30. It had previously been scheduled to expire at the end of 2023.
The U.S. Trade Representative’s office (USTR) had previously threatened 25% tariffs on more than $2 billion worth of imports from Italy, Austria, Britain, France, Spain and Turkey, from cosmetics to handbags.
The USTR did this after its “Section 301” investigation concluded that the digital services taxes were discriminatory and aimed largely at U.S. tech giants such as Facebook owner Meta, Google owner Alphabet, Amazon.com and Apple.
($1 = 0.9139 euros)
(Reporting by Giuseppe Fonte, Editing by Sharon Singleton)
