Italy has decided to impose a new tax on digital companies, including US technology giants, as part of the 2020 budget project, a move that could attract threats of retaliation from Washington.
According to the site TOI, tax due next year, will require companies such as Facebook, Google and Amazon to pay a 3 percent tax on online transactions, according to the text of the draft budget.
Washington has repeatedly said the tax was unfairly targeted at US companies, while a senior US official said President Donald Trump was ready to threaten retaliation when he meets Italian President Sergio Matarella in Washington on Wednesday.
Sources told Reuters on Monday that the Italian program is expected to generate about 600 million euros ($662 million) a year as Rome tries to find alternative revenues that would allow it to avoid a planned increase in sales tax.
Italy and other EU members have long complained about how web giants collect huge profits in their countries but pay only a few million euros of taxes each year.
But the EU has so far failed to agree on how to levy corporate taxes. France and the United States reached an agreement in August to end the standoff over a French tax on big Internet companies.
Currently, companies can make profits in low-tax countries, such as Ireland and Luxembourg, regardless of the source of revenue.
Italy follows with proposals from the Organization for Economic Cooperation and Development (OECD), which last week urged governments to redraw rules on global giants.