Google boss Eric Schmidt hits back at Ed Miliband over tax

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Media caption,

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

Google's boss has told UK politicians to "sort out" the tax system, after criticisms of the internet search giant by Labour leader Ed Miliband.

Mr Miliband told a meeting of the firm's staff that he was "disappointed" it had paid just £6m in corporation tax on UK sales worth £3.2bn in 2011.

But executive chairman Eric Schmidt said Google followed "the tax laws of the countries we operate in".

He added the company would "continue to invest in the UK, no matter what".

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


Mr Miliband, speaking at the Google Big Tent event in Hertfordshire, said the US company's employees expected it to do the "right thing", as its motto was "Don't be evil".

He said: "I can't be the only person who feels deeply disappointed that a great company like Google, with great founding principles, should be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds in revenue in Britain, it is fair that it should pay just a fraction of 1% of that in tax.

Media caption,

Labour leader Ed Miliband: "We need to reform... the crazy rules that allow companies to shift profits from one jurisdiction to another"

"So when Google does great things, I will praise you... But when Google goes to extraordinary lengths to avoid paying its taxes, I say it's wrong."

Mr Miliband welcomed the company's support for international tax reform and said action was needed to crack down on tax havens and "crazy rules" allowing the transfer of profits from one country to another to minimise tax liabilities.

Mr Schmidt, who did not attend Mr Miliband's speech, was later asked about the comments, telling the audience: "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 longstanding 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."

He added: "We are trying to do the right thing. We are not trying to do the wrong thing.

"We completely endorse the idea of having a big debate at the G8, the G20 and so forth and so on. People have to sort this out."

International agreements should not see multinational companies "getting triple- or quadruple-taxed".

'Fair share'

He added: "Google will continue to invest in the UK, no matter what you do, because the UK is too important to us."

Prime Minister David Cameron did not mention the issue during a Downing Street meeting with Mr Schmidt, a member of the government's business advisory group, on Monday.

But, in a summit in Brussels later on Wednesday, he will urge EU leaders to back global action against tax evasion and "aggressive" tax avoidance in the run-up to next month's G8 summit.

However, Deputy Prime Minister Nick Clegg has revealed that he did raise tax avoidance at the meeting with Mr Schmidt in a "polite but firm way".

He told a press conference in London: "My overall approach to tax is the obvious one. I put this directly to Eric Schmidt from Google and other business leaders at a meeting in Downing Street a couple of days ago.

"We are bringing the tax burden on corporations down by lowering the rate of corporation tax but in return people have to pay their fair share."