Eric Schmidt, chairman of search giant Google, has said his company’s approach to corporation tax is just "capitalism" and that he is "very proud" of the structure in place.
The company is one of many big organisations currently embroiled in arguments over what tax it pays. According to reports Google generated sales in the UK in 2011 of $4.1bn, around 11% of its total revenue. However it paid only £6m in corporation tax after using a variety of legal methods to reduce its payments.
It was also recently revealed that Google shifted nearly $10bn in worldwide revenue to its operations in Bermuda, where there is no corporation tax. This saved the company around $2bn in tax, it is claimed.
Now Google chairman Eric Schmidt has defended his company’s tax procedures, claiming the company abides by all local tax laws.
Speaking to Bloomberg, he said: "We pay lots of taxes; we pay them in the legally prescribed ways. I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate. It’s called capitalism. We are proudly capitalistic. I’m not confused about this."
Alongside Google, Amazon, Microsoft and Starbucks have all faced questions over how much tax they pay in recent weeks. Coffee chain Starbucks has reacted to the furore by saying it will pay £20m in tax over the next two years, more than it is legally required to do so.
However Schmidt appeared to rule out Google doing something similar. In an earlier interview, quoted in the Independent, he said: "It’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."
Margret Hodge, chairperson of the Public Account Committee that tackled Google over its tax arrangements, said Schmidt’s comments were "arrogant."
"For Eric Schmidt to say that he is ‘proud’ of his company’s approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK," she said, according to the Independent. "Ordinary 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."
She added that 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. "
