Mubasher: Italy is preparing a new tax on digital businesses in its 2020 budget, Reuters reported citing two coalition sources.

The new tax will require multinational web-based giants to pay 3% on internet transactions, one source told the news agency.

Italy’s government is seeking alternative revenues which will allow it to cancel a planned hike to sales tax worth around EUR 23 billion, due to be implemented as from next January, a drag on an already stuttering domestic demand.

The new plan will operate under a “self-assessment taxation regime,” where companies provide a calculations of the amount owed, sources said

The plan is set to generate nearly EUR 600 million per annum, while companies with annual global revenues of at least EUR 750 million and digital services exceeding EUR 5.5 million in Italy will be subject to the new tax.

If the European Union (EU) impose common rules for web-tax covering the bloc member states, Rome will make changes to its plan, the sources told Reuters.

The scheme came in line with the proposals from the Organisation for Economic Cooperation and Development (OCED) which urged governments to review rules for taxing global giants.

The coalition of the 5-Star Movement and Democratic Party will send the draft budget to the European Commission by 15 October.

It is worth noting that Italy and EU states have for long criticised internet giants like Facebook, Google and others making huge profits at their home countries, but paying a few millions of euros in annual taxes.

Italy had already drafted plans for a web tax last year under the preceding coalition government of 5-Star and the right-wing League, but the government collapsed last August and the planned tax never came in effect.