Eric Schmidt denies unethical tax affairs at Google
Eric Schmidt, Google’s executive chairman, mounted a staunch defence of the search giant’s tax affairs today, arguing it was for governments to make the laws and for businesses to abide by them.
5:09PM BST 22 May 2013
1 CommentSpeaking at Google’s own Big Tent conference in Watford, Mr Schmidt said: “I don’t think companies should decide what tax policies should be. Governments should.”
He added that he welcomed the forthcoming debate at the G8, initiated by David Cameron, and said that Google would be “completely transparent” about its arrangements.
Mr Schmidt said public companies could not try to obey “the spirit of the law” when they operated in many jurisdictions and had a duty to their shareholders. Asked directly if he thought Google’s tax arrangements were unethical he said “No”, and said Google was operating in a complex global marketplace.
“I can’t defend the international tax regime. I did not design such an irrational structure,” he said. “It would not have been designed this way by a computer scientist.”
In a tense on-stage interview, Mr Schmidt reiterated Google’s view that governments had the power to set tax rates and that the business would cooperate. “The Google view here is that taxes should not be up to Google. We are following the international tax regime.”
Asked to defend the arrangement where most of Google’s taxes on money earnt in Britain is funnelled through Ireland and Bermuda and the company pays an effective rate of less than one per cent, he said, “Virtually all of the American companies have tax structures like this. And there are analogous strucures for European companies in America. But governments have a lot more power than we do. We have to follow the law and if the law changes we will absolutely follow it.”
Mr Schmidt said Google would continue to invest in the UK because of the importance of the market, claiming at one point “We love the United Kingdom”.
Earlier in the day, Labour leader Ed Miliband had also used Google’s conference to launch a stinging attack on global businesses including Apple and Google, comparing their behaviour to that of Goldman Sachs and Lehman Brothers.
Mr Miliband said that major businesses with low tax bills, including Google, Apple, Amazon and Starbucks shared a culture of irresponsibility with the banks that caused the global financial crisis. “I have deep problems about the culture and the culture isn’t that different from what we saw at some of the banks,” he said.
Mr Miliband called for more nimble regulation at a European level, reiterated his call for a ‘Digital Ombudsman’ to regulate potentially anticompetitive businesses, and added that capitalism “should be about more than adhering to the letter of the law”. He said Google had diverged from its ambitious slogan of “Don’t be evil”.
The Irish authorities themselves have called for an international clampdown on companies shifting their profits around the world in a bid to diminish their tax bills, responding to criticism that Apple in particular used loopholes to transfer money. Google has also been condemned for claiming all its European selling occurs in Ireland.
