Ahead of the G7 finance conference that begins on Friday, Italy’s Economy Minister Giancarlo Giorgetti stated that an agreement over a global minimum tax on multinational corporations will not be reached by June as previously scheduled.

China, India, and the United States are all hesitant about the parameters of the agreement, according to Giorgetti, the meeting’s chair and Italy’s current G7 president.

With a “first pillar” intended to reallocate taxation rights on around $200 billion in corporate revenues to the nations in which the corporations conduct business, the tax is primarily directed towards digital behemoths with headquarters in the United States.

Giorgetti stated on Thursday to reporters in Stresa, northern Italy, that not all of the nations scheduled to take part in a multilateral signing convention next month will ratify the agreement.

The minister declared, “That work will not be completed; this is not a good thing.”

Italy declared last week that it would encourage desperate negotiations to keep plans from collapsing.

The first pillar would have allowed for the resolution of a dispute in which the US has threatened to impose retaliatory tariffs on European nations—including Italy—that have declared or implemented national digital levies.

25% taxes on goods worth over $2 billion that are imported from Italy, Austria, Britain, France, Spain, and Turkey—including handbags and cosmetics—have been threatened by US trade officials.

An official told Reuters on Friday that Italy seeks to work with Washington to reach a deal that would maintain its levy while ending these duties, which are now set to expire in June.

Rome thinks that a coordinated strategy at the EU level would be more successful, thus the administration wants to include other European nations in the talks with Washington, the official continued.

In 2019, Italy levied a 3% tax on online transaction revenue for digital businesses with 750 million euros or more in sales, at least 5.5 million of which were made in Italy. Rome’s tax revenue in 2022 amounted to about 390 million euros ($422 million).

Countries are putting the second pillar of the global minimum tax agreement into effect while the first pillar remains unmoving.

This portion of the agreement permits governments to impose a top-up tax on income obtained in nations with lower tax rates in an effort to guarantee that businesses with annual sales above 750 million euros pay a worldwide minimum rate of 15%.

(Adapted from MarketScreener.com)