'It's called capitalism': Google boss says he is 'proud' of the company's multi-million pound tax avoidance schemeThe search giant paid 6m in tax – despite making sales of 2.6bnCompany’s chairman Eric Schmidt said the company paid 'lots of taxes – in legally prescribed ways'
Peter Campbell and Amanda Williams
01:02 GMT, 13 December 2012
07:49 GMT, 13 December 2012
The boss of Google last night said he was ‘very proud’ of the elaborate structure that helped the search giant slash more than 200million from its UK tax bill last year.
Taxpayers were left to fund the shortfall after Google contributed just 6million to government coffers – despite making sales of 2.6billion.
MPs on the influential Public Accounts Committee last month slammed the group’s methods as ‘immoral’.
Google chairman Eric Schmidt said he was 'very proud' of the elaborate structure that helped the search giant slash more than 200million from its UK tax bill last year
But when asked about the arrangement which saw the group funnel billions of pounds to Bermuda, a renowned tax haven, the company’s chairman Eric Schmidt said: ‘It’s called capitalism.’
Mr Schmidt, who is estimated to be worth 4.6billion, said: ‘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.
‘It’s called capitalism.
‘We are proudly capitalistic. I’m not confused about this.’
But Business Secretary Vince Cable was unimpressed by Mr Schmidt’s views, telling The Daily Telegraph: 'It may well be [capitalism] but it’s certainly not the job of governments to accommodate it.'
Chancellor George Osborne has revealed of measures to bolster HMRC's collecting powers
His claims will gall the millions of families who are being hit by austerity and the biggest squeeze on living standards in a generation.
The current tax gap – the gulf between what is owed and the amount that has been collected – stands at a staggering 32billion.
It is not the first time Mr Schmidt has derided the British tax system and its loopholes.
He previously invoked rage by saying the company was obliged only to pay the legal minimum.
‘We could pay more [UK] tax but we would have to do so voluntarily,’ he said last year.
Yesterday’s comments come days after it emerged the internet giant funnelled more than 6billion into tax-haven Bermuda last year.
The figure is almost double the amount the company was hiding offshore three years ago, official company documents show.
By sheltering the money it avoided more than 1billion in taxes on its worldwide operations.
Last week the Chancellor announced he would bring in a general anti-abuse rule to clamp down on tax avoidance – which is legal but viewed as morally questionable.
In his Autumn Statement, George Osborne unveiled a raft of measures to bolster HMRC’s collecting powers, including funding for an army of 2,500 more tax inspectors.
Google was founded in 1998 by Larry Page, 39, and Sergey Brin, 38, who had met at Stanford University in California three years earlier.
An American pressure group called Consumer Watchdog, based in California, has written to the Senate’s Finance Committee demanding a hearing on Google’s 'global tax avoidance strategies'.
Director John Simpson has called for the Committee to organise a time for Mr Schmidt and Google’s chief executive could testify under oath and explain their company’s apparent 'abuse of the tax code to the detriment of all who play fairly.'
Matt Brittin, Google’s UK head, also defended the avoidance scheme saying that MPs were blaming companies for a system that they had designed.
He told The Telegraph: 'Google plays by the rules set by politicians. The only people who really have choices are politicians who set the tax rates.'
Starbucks last week caved in to public pressure and agreed to pay millions in corporation tax amid fears of a growing consumer boycott.
The global coffee group struck a deal with HMRC to pay 20million over the next two years, whether or not it reports a profit.
The move will bring valuable money into Treasury coffers.