Eric Schmidt, the executive chairman of Google, has come out in defence of Google's tax avoidance practises in the U.K. Members of Parliament have already denounced multi-national firms who pay little amounts of tax as "immoral," but Schmidt seems to be okay with the practise.
Speaking to the BBC, Schmidt admitted that the U.K is a "very good market for [Google]," bringing in over £395 million ($602 million) in 2011. On that £395 million, Google paid just £6 million in tax, an effective rate of 1.5% (the current corporate tax rate is 21%).
Schmidt claimed that "investing heavily" in U.K business was equivalent to paying the full and proper amount of tax, saying:
"We empower literally billions of pounds of start-ups through our advertising network and so forth. And we're a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country."
While Google do provide their AdSense and AdWords services in the U.K, most of that profit still goes to Google.
Google isn't alone in avoiding tax, however. Facebook made over $1 billion in profit during 2012 and paid no tax - in fact, they got a $430 million refund. Meanwhile, Microsoft could owe the Danish government around $1 billion, and has been caught avoiding tax in the U.K. Schmidt claims that U.K firms pay little to no tax in the U.S, which is true. Google does comply with the law, but the morality of avoiding tax is questionable.
Chancellor George Osborne, along with his counterparts in France and Germany, have called for an end to "profit shifting," where large companies shift profits to Ireland, where corporation tax is far lower.
Source: BBC | Image via LinkedWire