The online giant chief rebuffed criticism over its corporation tax payments saying “it is called capitalism. We are proudly capitalistic. I’m not confused about this.”
Earlier this year it was revealed that Google paid only £6m in tax after making revenues in the UK of £396m.
“We pay lots of taxes; we pay them in the legally prescribed ways. I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,” Schmidt told Bloomberg.
Business secretary Vince Cable has dismissed the comments, telling the Daily Telegraph, “It may well be [capitalism] but it’s certainly not the job of governments to accommodate it.”
The recent Public Accounts Committee hearing heard how 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.
Last week Starbucks bowed to public and political pressure by announcing unprecedented plans to voluntarily pay over £20m in corporation tax to HMRC over the next two years.
However, the tax profession reacted angrily to the proposal, claiming it “makes a mockery” of the tax system.