Google has struck back at critics of its UK tax maneuvering, with executive chairman Eric Schmidt arguing that the search giant's role to "empower" British startups excuses its minimal 2011 $9.1m corporation tax bill. Taken to task on BBC Radio 4, the BBC reports, Schmidt described Google as "a key part of the electronic commerce expansion of Britain" and reiterated the fact that, while multinational tax management practices have become controversial in recent years, Google is operating completely within the law.
"I think the most important thing to say about our taxes is that we fully comply with the law and we'll obviously, should the law change, we'll comply with that as well" Schmidt said, speaking on "The World at One" [UK streaming only] today. However, he was also keen to highlight that Google is by no means the only company to manage its finances in that way.
"The same is true for British firms operating in the US, for example" Schmidt argued, suggesting that critics should look at taxes "in totality" rather than on a country-by-country basis.
Google's investment into the UK is widespread, Schmidt pointed out, with more than 2,000 employees in the country. "We empower literally billions of pounds of start-ups through our advertising network and so forth," he said.
The company was taken to task by the UK's Public Accounts Committee in 2012, with UK chief Matt Brittin conceding that Google took advantage of loopholes that allowed it to shuffle its money around so as to minimize its tax bill, but said that it was all within legal limits. That proved frustrating to chairman of the committee, Margaret Hodge, however. "We're not accusing you of being illegal" Hodge told Brittin, "we are accusing you of being immoral."
Google shares space under the microscope with Amazon and Starbucks, each accused of using tax havens to reduce the amount of money they owe the UK government. In Google's case, the company revealed it used an Irish company to process non-US sales, the Guardian reported, as well as diverting some money through Bermuda. UK corporation tax of £6m was paid by Google in 2011, despite UK profits of £396m ($603m).
Aside from Schmidt's comments about Google's role in digital development in the UK, the company maintains that "its underlying economic activity arose from the innovative software technology underlying its Google search engine generated by the US company" the Committee recorded. That's not enough to prevent the UK tax service, HMRC, from investigating its 2005-2011 tax returns, however.