Italy’s Economy Minister Giancarlo Giorgetti announced today, May 24, 2024, that the agreement on a global minimum tax on multinationals will not be concluded by June, as initially anticipated.
The agreement will not receive approval from all nations scheduled to partake in a multilateral signing convention in the upcoming month, said Giorgetti on Thursday. “That work will not be completed, this is not a good thing.”
According to the minister, the US, India and China have reservations over the terms of the deal.
The primary objective of the tax is to target US-based digital giants; it includes a first pillar that seeks to reallocate taxing rights on about USD 200 billion of corporate profits to the countries where these companies operate.
The first pillar could have facilitated the resolution of a conflict that led to the US threatening retaliatory tariffs against European nations who have either announced or implemented local digital taxes.
Earlier, US trade officials warned about imposing 25% tariffs on imports worth over USD 2 billion from Italy, Austria, Britain, France, Spain, and Turkey. These imports include everything from cosmetics to handbags.
In an effort to prevent these tariffs, Italy seeks to engage in negotiations with Washington that will halt the tariffs, which are currently on hold until June, while also maintaining its own levy.
In 2019, Italy implemented a 3% tax on digital companies’ revenue from internet transactions, provided that their sales reach a minimum of EUR 750 million, with at least EUR 5.5 million generated within Italy.
As the first pillar is still under negotiation, countries are implementing the second pillar of the global minimum tax deal. This ensures companies with revenue greater than EUR 750 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.