Italy and France have introduced new proposals to expand and increase their digital services taxes (DSTs), targeting revenue from large digital companies like Apple, Amazon, and Meta. Italy’s proposed 2025 budget would remove two existing thresholds, broadening the tax’s reach beyond just the largest corporations. Previously, Italy’s “web tax” only applied to firms with global revenues above €750 million, provided they earned at least €5.5 million in Italy. If these thresholds were eliminated, a larger category of digital businesses would be subject to the tax, which would affect smaller and mid-sized businesses.
In France, lawmakers are considering multiple amendments to raise their current DST rate from 3% to as high as 6%—a rate they claim would generate an additional €500 million in revenue. Legislators that are in support of the increase believe that raising the tax rate is a way of a “search for greater tax justice,” since it places a larger portion of the tax burden on big digital companies rather than on French employees and retirees.
These changes come at a time when efforts at the Organization for Economic Cooperation and Development (OECD) are stalled. The OECD has been negotiating the terms of the Amount A worldwide tax reform agreement, which would redistribute the leftover profits of the biggest corporations in the globe in order to prevent unilateral DST actions. If this international accord doesn’t advance, the actions of France and Italy could serve as a model for other countries to follow.
U.S. officials have already responded strongly to the latest DST ideas. Rep. Kevin Hern (R-Okla.) stated, “the Biden Administration must make clear to Italy and France that the U.S. will use its power to combat novel extraterritorial and discriminatory taxes on U.S. business.” These measures could significantly impact digital exports and U.S. jobs as tech giants face increasing operational costs and regulatory hurdles in Europe.
The escalating DST hikes from Italy and France illustrate how the Harris-Biden administration’s passivity has enabled foreign governments to impose punitive taxes on American tech companies. By failing to respond appropriately, this administration has allowed these nations to undermine U.S. interests and burden American innovation and jobs with unfair costs. While European nations move aggressively to tax U.S. digital exports, the U.S. remains stalled, risking a future where American companies struggle to compete abroad due to rising regulatory and financial barriers. It’s past time for the administration to step up, prioritize American interests, and lead decisively in securing a fair and open digital economy.
