Google chief defends company’s corporate tax payments

Google chief executive Eric Schmidt yesterday insisted that the company is “trying to do the right thing” over its corporation tax payments, but warned that it is up to national governments, not companies, to decide on tax laws.

The internet search company, which funnels most of its UK profits through an Irish subsidiary, has been strongly criticised in London, including by Labour leader Ed Miliband, who told company staff directly that paying less than 1 per cent tax on billions of UK-generated revenue is not acceptable.

“When Google does great things for the world, I applaud you. But when Eric Schmidt says its current approach to tax is just capitalism, I disagree. And it’s a shame Eric Schmidt isn’t here to hear me say this direct,” Mr Miliband told staff at Google’s Hertfordshire offices.

“When Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong. And it’s not just me that thinks it. It is crystal clear from your own founding principles,” the Labour leader firmly declared.

“Your employees want a culture where they feel they are doing the right thing. Your customers want it too. Our society depends on the right messages being sent out from the top.”

Though Mr Schmidt was not present to hear the Labour leader, he moved later to counter the criticisms, saying: “I don’t think companies should decide what tax policies should be. I think governments should. All of us are operating in a very, very long-standing tax regime which was set up for various reasons that don’t necessarily make sense to me or anyone else. But they are the way the global tax regime works. We’re trying to do the right thing. We’re not trying to do the wrong thing.”

'We love the UK'
Questioned about its use of Irish and Bermudan subsidiaries, Mr Schmidt rejected charges that Google is paying no tax: "We love the UK, it's a huge operation for us. We have 3,000 employees, [we're] doing a huge development in King's Cross.

“I can’t defend the international tax regime. Both your government and mine say it needs to be changed. I can’t defend an irrational structure, a computer engineer would not have designed this,” the US-born executive told a questioner.