Google Boss: “I’m Very Proud Of Our Tax Avoidance Scheme”
The head of the internet giant Google has defiantly defended his companyâs tax avoidance strategy claiming he was âproudâ of the steps it had taken to cut its tax bill which were just âcapitalismâ.
In an interview in New York Eric Schmidt, Googleâs Chairman, confirmed the company had no intention of paying more to the UK exchequer. Documents filed last month show that Google generated around ÂŁ2.5 billion in UK sales last year but paid just ÂŁ6m in corporation tax.
The Californian based search giant has also been revealed to have sheltered nearly $10bn of its revenues in Bermuda allowing it to avoid some $2bn in worldwide income taxes in 2011.
But Mr Schmidt said such schemes were legitimate and the company paid taxes âin the legally prescribed waysâ.
âI am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,â he said.
The Silicon Valley boss went on to suggest that Google would not turn down the opportunity to draw on the big savings allowed under the law in the countries it operates in: âItâs called capitalism. We are proudly capitalistic. Iâm not confused about this.â
He also ruled out following Starbucks in voluntarily handing more money over to the UK Government.
âThere are lots of benefits to [being in Britain],â he said.
âIt’s very good for us, but to go back to shareholders and say, ‘We looked at 200 countries but felt sorry for those British people so we want to [pay them more]‘, there is probably some law against doing that.â
Mr Schmidtâs defiant stance is unlikely to find favour on either side of the Atlantic with both the American and European Governments searching to find ways of forcing âstatelessâ internet companies such as Google to pay more tax.
The issue will be raised by George Osborne when Britain takes over the chairmanship of the G8 and will also be investigated by the Organisation for Economic Co-operation and Development (OECD).
Last week the Chancellor said he was committed to âleading the international effortâ to prevent international companies transferring profits away from major economies, including Britain, to tax havens.
âWe will put more resources into ensuring multi-national companies pay their proper share of taxes,â he said. âWith Germany and now France, we have asked the OECD to take this work forward and we will make it an important priority of our G8 Presidency next year.â
Tonight Margaret Hodge, chairman of the powerful House of Commons Public Accounts Committee, which recently cross examined Google UK on its tax affairs said Mr Schmidt should be ashamed rather than proud of his companyâs tax bill
âFor Eric Schmidt to say that he is âproudâ of his companyâs approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK,â she said.
âOrdinary people who pay their taxes unquestioningly are sick and tired of seeing hugely profitable global companies like Google use every trick in the book to get out of contributing their fair share.
Google should recognise its obligations to countries like the UK from which it derives such huge benefits, and pay proper corporation tax on the profits it makes from economic activity here. It should be ashamed, not proud, to do anything less. â