Pursuant to the request for comments published by the Office of the United States Trade
Representative, Google submits the following notice of intent to testify and proposed hearing
statement in relation to Docket Number USTR-2019-0009.
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Thank you to members of the Section 301 Committee for convening today’s hearing. We
appreciate the opportunity to testify regarding the investigation into France’s Digital Services
Tax.
My name is Nicholas Bramble, and I serve as Trade Policy Counsel for Google. At Google, we
are focused on making sure all Americans can use the power of the internet to find new
opportunities, including through trade. Through longstanding products like Google Search and
Ads, and new services like Google Market Finder, we strive to make it simpler for businesses of
all sizes to grow and reach customers around the world.
International trade requires a consistent and predictable international tax system. No matter
whether trade is conducted over air, sea, or the internet, businesses depend on clear rules of
the road on tax and consistency across jurisdictions.
Corporate income tax is an important way that businesses contribute to the countries and
communities where they operate. Google’s overall global tax rate has been above 23 percent
over the past 10 years, in line with the 23.7 percent average statutory rate across the member
countries of the OECD. Most of these taxes are due in the U.S., where most of our products and
services are developed.
This allocation of corporate tax payments is not unique to Google. American companies pay
most of their taxes in the U.S. -- just as German, British, French, and Japanese firms pay the
majority of their corporate taxes in their home markets. That state of affairs reflects
long-standing rules about how corporate profits should be allocated among various countries,
based on international consensus and an OECD model treaty that creates the framework for an
interlocking system of bilateral tax treaties.
This international tax system provides predictability that enables companies, both large and
small, to export and do business in multiple countries without having the same profits taxed
twice or being subject to discriminatory taxation.
As our economy evolves, it is important to modernize this system. At Google, we support
international tax reform driven by the OECD process, which can help guide how profits should
be allocated among countries.
Countries such as the U.S. and Germany have put forward constructive proposals at the OECD
to modernize tax rules and require more taxes to be paid in countries where products and

 services are consumed. In fact, over 130 governments are engaged in talks aimed at
modernizing the international tax system.
It is important that all countries maintain this multilateral momentum. Efforts by one country to
unilaterally change the rules on how profits are allocated among countries can generate new
barriers to trade and hamper economic growth.
Unfortunately, the enactment of France’s Digital Services Tax threatens to undermine the OECD
process. It is a sharp departure from long-established tax rules and uniquely targets a subset of
businesses. French government officials have emphasized repeatedly that the DST is intended
to target foreign technology companies.
Under the DST, value attributable to risks taken and decisions made in one country is being
claimed by another country, without sufficient justification and outside the long-established
framework for international tax policy.
The new French law would tax revenue from only a handful of e-commerce and internet
businesses, on the theory that the digital economy presents new challenges and that only a
handful of companies rely on digital business models. However, both the OECD and the
European Commission Expert Group on Taxation of the Digital Economy have found that every
sector of the economy -- ranging from manufacturing to agriculture to healthcare -- is becoming
digital, and confirmed that unique tax rules targeted at digital practices simply do not make
sense.
While the DST purports to target two sub-sectors of the digital economy, its impact will extend
beyond those sectors. The DST is likely to harm a wide range of American and other global
businesses that use digital services and ads to reach French consumers. This further
underscores the need to pursue international tax reform through the multilateral OECD process.
The DST departs from prevailing standards in other ways. It unreasonably applies retroactively
to January 1, 2019, which does not allow companies to plan and requires the implementation of
new systems to calculate the tax. The DST applies to taxation of revenue rather than income,
which increases the risk of double taxation, and more fundamentally is out of alignment with
prevailing tax principles. The DST will result in unpredictable extraterritorial impact, and is likely
to generate disputes on whether specific digital activities were “supplied in France” or in another
region.
In contrast, other governments -- including Sweden, Ireland, and others in the EU -- have stated
that a consensus-based approach to international tax policy is preferable to a unilateral DST
model.
It is worth noting that the French DST model may spread to other regions. The UK has
legislated its own DST, while Spain, Italy, Austria, Czechia, New Zealand, and other countries

 are considering similar unilateral taxes. These countries are watching the French experience
and considering whether a unilateral approach might be easier or more advantageous than
pursuing a multilateral agreement at the OECD.
Ultimately, a series of cascading unilateral measures would have dangerous repercussions for
the OECD’s multilateral process and for a wide range of U.S. export sectors. This is a concern
for international trade and the wider economy if countries follow the DST model and select
specific sectors and groups of foreign companies for targeted tax policies.
We support USTR’s investigation into these issues. We hope governments can avoid taking
unilateral tax actions targeted at specific sectors, and instead work together to develop a
consensus at the OECD around a new and modern framework for coordinated taxation.