Google's Eric Schmidt 'perplexed' over UK tax debate

media captionGoogle executive chairman Eric Schmidt: "We completely endorse the idea of having a big debate"

Google's executive chairman Eric Schmidt has said he is "perplexed" by the ongoing debate over the company's tax contributions in the UK.

Mr Schmidt told the BBC that the company did what was "legally required" to pay the right amount of taxes.

Google paid £10m in UK corporate taxes between 2006 and 2011.

Mr Schmidt said it was up to the government to change its tax system if it wanted companies to pay more taxes.

Speaking on BBC Radio 4's Start the Week, he said: "What we are doing is legal. I'm rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional.

"I view that you should pay the taxes that are legally required. It's not a debate. You pay the taxes.

"If the British system changes the tax laws, then we will comply. If the taxes go up, we will pay more, if they go down, we will pay less. That is a political decision for the democracy that is the United Kingdom."

Tax reform debate

Meanwhile, the head of the Parliamentary Public Accounts Committee, Margaret Hodge, has suggested a new committee should be established to oversee the tax arrangements of major firms.

She told the Independent newspaper that such a committee could hear evidence from companies in secret, meaning that companies would not be able to hide their tax affairs behind confidentiality rules.

Google, most of whose UK sales are routed through Ireland, is one of the multinationals strongly criticised for organising their tax affairs in ways that minimise the amounts they pay in the UK.

Last week, European Union leaders agreed to tackle tax avoidance through an "automatic information exchange between tax authorities" to monitor the situation.

The Google chairman has previously argued that corporate taxes should be levied in the country where it conducts economic activity and takes risks, rather than where products are consumed.

He has also called for a debate on international tax reform.

"Politicians - not companies - [should] set the rules...When legislators are doing the lobbying and companies are articulating the law as it stands, it's a confusing spectacle for everyone," he recently wrote in the Observer.

"Our hope is to move the debate forward, with everyone engaged constructively in developing a clearer, simpler system - one in which companies that abide by the law know that the politicians who devised the rules are willing to defend and commend them."