The Italian tax is similar to one introduced by France earlier this year, and will place a 3% levy on firms which have more than €750 million (US$839 million, A$1.2 billion) in global revenue and at least €5.5 million in Italy.
The Wall Street Journal, which reported the Italian move, said other countries like the UK and Canada were likely to follow the French and Italian examples.
As to how the American Government will react to the Italian move remains to be seen. When France introduced its tax, the US was up in arms.
But more recently, the US has warned that it may impose a 100% tax on French imports in retaliation.
There have been moves among OECD countries to reach a consensus on a digital tax but as with all agreements sought to be reached among large groupings, no progress has been made.
The Italian tax will be levied on transactions between businesses and services like cloud computing. Companies like Spotify and Netflix will not be taxed.
The measure is forecast to raise about €700 million.