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

Monday 27 May 2013 17.53
Eric Schmidt said he saw taxes as mandatory and not optional
Eric Schmidt said he saw taxes as mandatory and not optional

Google’s executive chairman Eric Schmidt has told a British radio station that he was "perplexed" by the debate over the company's tax affairs.

Mr Schmidt insisted the company paid everything it was legally required to in the UK and suggested it was up to the government there to change the law if it wanted more from the firm.

Google has come under fire over reports that it paid only £10 million in corporation tax in the UK between 2006 and 2011, despite revenues of £11.9 billion.

Much of the company's European sales are routed through its EU headquarters in Ireland.

Mr Schmidt told BBC Radio 4's Start the Week: "What we are doing is legal. I'm rather perplexed by this debate, which has been going in the UK for quite 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."

Mr Schmidt was brought before the public accounts committee earlier this month to account for Google's tax affairs after MPs were unhappy with the company's previous evidence.

Britain’s Deputy Prime Minister Nick Clegg also raised the controversy directly with Mr Schmidt at a meeting in Downing Street and days later Labour's Ed Miliband told the corporation at its own "Big Tent" event it should not be going to "extraordinary lengths" to avoid paying taxes.

Mr Schmidt dismissed suggestions that a legalistic approach to paying taxes did not sit well with Google's pledges on social responsibility.

He said: "I do not agree with this and the reason is that at least under American law we have a fiduciary responsibility to our shareholders to account for things properly so if we were, for example, to just arbitrarily decide to pay a different tax rate than we were required to, a more favourable one for example to a particular country, how would we account for that?

"How would we file the necessary paperwork, what would be the legal consequences in other countries?

"Somehow these questions are ignored in the debate. We are very happy with whatever the countries all come to agreement on. We are not particularly upset about it."

He added: "Our position is very simple, taxes are not optional, we pay the mandatory amount."