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Italy's tax settlement with Facebook unlikely to set precedent, say experts
Last Updated: 2018-11-30 14:12 | Xinhua
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Italy resolved one of its biggest-ever tax disputes this week when social media giant Facebook agreed to pay more than 100 million euros (115 million U.S. dollars) in back taxes. But experts said the deal will do little to clarify the way digital multinationals should be taxed.

According to Italy's tax authority, the agreement with Facebook would "end the disagreement connected to tax investigations by the financial police under the orders of the Milan state prosecutor for 2010 to 2016." Facebook confirmed the agreement in a statement.

But Tommaso Di Tanno, a tax law professor at Milan's Bocconi University, called the agreement "a one-time transaction" and he said the construction of the agreement means that neither side admitted any wrong doing, meaning it would not set any precedent for any period after 2016 or regarding tax obligations for any other company.

"This agreement provides money to the Italian state," Di Tanno told Xinhua, "But it doesn't do anything beyond that. It doesn't help define future tax rulings in any significant way."

Many digital multinationals have previously struck deals with Italian tax authorities. In these cases, almost all the agreements were structured to satisfy demands of a specific tax investigation without setting a legal precedent. The new Facebook settlement continues that trend.

"The companies have evidently concluded it is better to negotiate these kinds of deals on a case-by-case basis than it is to negotiate some kind of framework that will make their tax obligations predictable going forward," Di Tanno said.

Even though the new deal does little to provide legal precedents for the future, Francesco Brandi, a former Italian tax official now working as a tax law professor at Rome's La Sapienza University, said that does not mean Italy will see a steady stream of this kind of tax settlement in the future.

"It's true that these deals do not provide a legal framework that can be applied in future cases, but part of the negotiation process is to help the companies involved understand what they have to do to stay out of trouble," Brandi said in an interview.

Though totaling more than 100 million euros, the deal with Facebook is smaller than other similar deals in recent years.

Within the last three years, Apple agreed to pay tax authorities more than 300 million euros (over 345 million U.S. dollars) for tax bills dating back to 2008, while Google agreed to pay 306 million euros (352 million U.S. dollars) to settle a tax bill for the 2009-2013 period. A tax agreement between Amazon and Italian tax authorities was worth around the same amount as the new Facebook settlement.

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