Italy offers multinationals voluntary "webtax" to avoid wrangles

ROME (Reuters) - Italy sought to boost revenue from multinational internet companies on Monday by offering them the chance to agree on their future tax bills rather than risk disputes.

People are seen at an Apple store in a mall in Rome, Italy May 19, 2017. REUTERS/Max Rossi

For years, Italy has argued that companies such as Amazon, Apple and Google avoid taxes by maintaining that they do not have a “stable presence” in Italy, even though they generate huge revenues there.

And after making little progress on an international “webtax” at a meeting of Group of Seven finance ministers this month, Rome has presented legislation of its own.

An amendment to a government decree to rein in this year’s budget deficit stipulates that multinationals with total revenues of more than 50 billion euros ($56 billion) per year and sales worth more than 50 million euros in Italy can fix their tax bill in advance.

Companies that sign up to the scheme will not only be able to agree their tax bills in advance for future years but will also have outstanding tax claims from previous years halved.

It remains to be seen if the companies will want to participate in the scheme, but this month Google agreed to pay 306 million euros to settle a tax dispute after Italian tax police alleged it had not paid tax on about 1 billion euros of Italian revenue between 2009 and 2013.

And tax police in Milan have told Amazon they believe the world’s largest online retailer has evaded around 130 million euros of taxes in Italy.

Italy’s parliamentary budget watchdog says that in 2015 Google paid Italian taxes worth about 25 percent of profit generated in Italy, while Facebook paid a rate of 18 percent. That compares with the country’s standard corporate tax rate of 31 percent.

The legislation is expected to be approved by the Chamber of Deputies next week, but will not be passed by the Senate until next month.

Francesco Boccia, the head of Italy’s lower house budget committee, estimated that it will boost revenues this year by around a billion euros, although the government has not provided an official estimate of its own.

($1 = 0.8903 euros)

Writing by Gavin Jones; editing by Alexander Smith