Google fights back against the taxman

Posted by Nick Farrell

Google has defended itself against allegations that it has been playing a game of tax evasion in the UK, claiming the nation is lucky to have the search engine working in the country.

Google's executive chairman Eric Schmidt said that the outfit was playing a key role in the UK's high-tech growth and so the tiny £6 million in corporation tax the company paid in 2011 was pretty good considering.

Just in case anyone disagreed with the statement that "Google is good for you really", Schmidt added that the arrangements "fully comply with the law" and it was acting in the same way as other firms.  

The UK Public Accounts Committee named and shamed Google, Starbucks and Amazon of "using the letter of tax laws both nationally and internationally to immorally minimise their tax obligations".

When asked about the company's tax bill on BBC Radio 4's World at One, Schmidt pointed out that he hired 2,000 employees in the UK and invested heavily in Britain. Of course if that logic was played out it would mean that all big corporations would not pay any tax at all and only the poor would have to pay them.

Schmidt went on to say Britain has been a very good market for Google, presumably because it did not have to pay much tax.

He claimed that Google empowered billions of pounds of start-ups through its advertising network. "We're a key part of the electronic commerce expansion of Britain which is driving a lot of economic growth for the country," he said.

Rather than seeing Google as an evil corporation which avoids taxes. Schmidt said that it was important to see it in totality. This is the way taxes are done globally. The same is true for British firms operating in the US. In other words, since companies avoid paying taxes everywhere in the world, people should not be upset if Google does the same in the UK.

We are glad he cleared that up. It means that if the government changed tax laws, then it could probably use corporate cash to fund any debt servicing. Fortunately Schmidt knows that the current government is only interested in taxing ordinary people.