Eric Schmidt Defends Google UK Tax Arrangements

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Google Chairman says Google UK tax arrangements comply with the law

Google chairman Eric Schmidt has defended the search giant’s UK tax arrangements, after MPs labelled its practices “immoral.”

The company pays just £6 million in corporation tax despite generating revenues of £395 million in this country. This is achieved by operating its UK business as an agent for its Irish operations so that it is only liable for UK tax on a ten percent commission on its revenue.

It has been noted that Google employs 700 “marketing consultants” in the UK, compared to only 200 in its Irish office who deal with UK advertising sales. Google employs about 3,000 staff overall in Ireland.

Google tax arrangements

Google, Android © Lyao Shutterstock 2012Schmidt told the BBC that this is simply how multinational companies conduct their tax arrangements, adding that British companies in US engage in similar schemes. He said that all of its practices complied with UK law and added that if the law changed, it would comply with that too.

The Google chairman said the firm invested heavily in the UK and that its services boosted the economy by empowering startups through services such as its advertising network. He called Google “a key part of the “electronic ecommerce expansion of Britain,” but conceded that the UK had been a very good market for Google as well.

The Public Accounts Committee (PAC) has accused HM Revenue and Customs (HMRC) of not doing enough to police the tax system, and has called for the aggressive pursuit of multinational companies that use legal loopholes to minimise their UK tax bill.

Google, Facebook, Amazon and eBay, have been particular targets for the PAC, which concluded that international companies were “exploiting national and international tax structures” and that the practice was widespread.

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