Google chief: 'I'm proud of tax we pay – it's called capitalism'
THE chairman of Google has hit back at near universal condemnation for the company's accounting methods, claiming he was "very proud" of how the search giant handles its tax affairs.
"It's called capitalism," Google's Eric Schmidt said. "We are proudly capitalistic. I'm not confused about this."
Mr Schmidt defended Google's accounting, despite heavy criticism of its tax affairs in recent days. Google more than doubled the amount of tax it avoids paying globally to more than $2bn (€1.5bn) last year.
The search engine funnels its European profits through its Irish office, where it employs more than 2,500 people, to an Irish-registered business in Bermuda where there is no corporation tax. The manoeuvre, known as the 'Double Irish', is completely legal, and there is no suggestion Google has broken any laws.
Nevertheless, that has not stopped politicians on both sides of the Atlantic laying into the company and other firms who use similar methods to cut their taxes.
The company also uses an accounting technique known as the 'Dutch Sandwich' to further reduce its tax bill.
Mr Schmidt however was unapologetic. Speaking to Bloomberg he said the company was simply pursuing solid "capitalist" principles.
"We pay lots of taxes; we pay them in the legally prescribed ways," he said. "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."
The company isn't about to turn down big savings in taxes, he said.
Mr Schmidt's comments are in stark contrast to the tone adopted by the likes of Starbucks, which agreed to make a voluntary payment of £20m (€24m) in corporation tax a year to the British exchequer after a consumer backlash against its tax arrangements.
The problems have led to questions about Ireland's generous tax regime, but the Government has dismissed any concerns, claiming that our system complies with all OECD regulations.
Nevertheless, in his Autumn Statement last week – effectively a mini budget – UK chancellor George Osborne revealed plans to work with the OECD in an effort to tighten up tax regimes across Europe.