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Google boss defends company tax record

Defensive wicket.

Google’s executive chairman Eric Schmidt has defended the company paying just £6m in corporation tax in 2011 despite revenues of £396m, saying it invested heavily the UK’s technology industry.

Schmidt was responding to criticism the internet giant faced from the Public Accounts Committee (PAC) earlier this year, who described its tax practices as legal but “immoral”.

In an interview to be broadcast on The World at One on BBC Radio 4, Schmidt said, "Of course that omits the fact that we also hire more than 2,000 employees and are investing heavily in Britain.

"Britain has been a very good market for us. 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.

"So from our perspective I think ... you have to look at it in totality. You're describing the way taxes work globally. And the fact of the matter is these are the way taxes are done globally. 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 obviously, should the law change, we'll comply with that as well." 

The PAC heard that Google manages its tax affairs in the UK through an Irish subsidiary, which employs Google UK as an agent. Only the fees paid back to the UK arm are taxable and the Irish arm of pays much of its revenue to the web giant’s Bermudan firm in a legal process.

This is a news story from economia.