Eric Schmidt defends Google's UK tax tactics

Written by Edward Chester

April 22, 2013 // 3:57 p.m.

Tags: #avoidance #eric-schmidt #google #tax #uk

Google executive chairman Eric Schmidt has come out in defence of the company's tax avoidance tactics here in the UK.

Responding to the recent controversy over news that the company had paid a mere £6m in tax during 2011, despite bringing in revenue of £395m, Schmidt argued that Google was actually doing a great deal of good for the UK economy.

"We empower literally billions of pounds of start-ups through our advertising network and so forth and we're a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country," he said speaking to the BBC's World at One show.

He also defended the company's tactics on the grounds that it was simply doing what all international companies do.

"The same is true for British firms operating in the US, for example"

"I think the most important thing to say about our taxes is that we fully comply with the law and we'll obviously, should the law change, we'll comply with that as well."

Google manages to pay such a low tax rate because it puts all of its UK revenue through its European base in Ireland, which has a corporation tax of only 12.5 per cent. It then goes via the tax haven Bermuda on its way back to the US. By doing this the company is only paying tax on the 10 per cent commission paid by the Irish part of the company to the UK arm. This tactic is entirely legal and commonplace among multinational companies.

However, Google was among a number of companies whose tax avoidance tactics were branded as 'immoral' last year by a committee of MPs. Clearly Schmidt doesn't see things this way.

What do you think? Should Google be a little less smart with its tax affairs or is it down to the government to change the rules?
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