Feeds

Schmidt 'very proud' of Google's tiny tax bill: 'It's called capitalism'

Ads giant branded 'morally bankrupt modern-day robber baron'

Beginner's guide to SSL certificates

Google executive chairman Eric Schmidt has dismissed criticism over how little corporation tax his company pays, saying it's just capitalism.

Schmidt is "very proud" of the corporate structure Google set up to divert profits made in European countries, such as the UK, to its firms in the low-tax havens of Ireland and The Netherlands, thus minimising its tax bill.

"We pay lots of taxes; we pay them in the legally prescribed ways,” he told Bloomberg. “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."

Google was lambasted by MPs for its tax chicanery, which is not illegal but has been described as "immoral".

US firms Starbucks and Amazon were also called in front of the same panel of MPs, sitting on the Public Accounts Select Committee; the coffee chain has since caved to political and consumer pressure and agreed to hand over some more dosh.

Starbucks, which collect £3bn in revenue from the UK last year, said it will pay an extra £20m in corporation tax over the next two years. MP Stephen Williams, co-chairman of the Liberal Democrat Treasury Parliamentary Policy Committee, described that offer as a "joke".

“It is extraordinary. People have been joking that some of these multinationals seem to think that paying tax is voluntary. Well, Starbucks have just confirmed the joke really," he said. "Tax is something that is a legal obligation that you should pay. It’s not a charitable donation in order to gain brand value."

In the US, pressure group Consumer Watchdog has written to the Senate Finance Committee urging it to call both Google CEO Larry Page and executive chairman Eric Schmidt in to "explain their company’s flagrant abuse of the tax code to the detriment of all who play fairly".

"Using dubious tactics dubbed the 'Double Irish' and the 'Dutch Sandwich', Google apparently was able to pay only 3.2 per cent in tax on its overseas profits in 2011 even though most of its sales were in countries with tax rates from 26 to 34 per cent," the group's privacy project director John Simpson said in the letter.

"Governments in Europe, many of which have been targets of Google’s morally bankrupt tax polices, are actively seeking redress. But this is not a problem that only impacts other countries’ revenues. Google’s tactics strike at the US treasury as well.

"It will be necessary to work with other countries’ tax authorities and to amend our tax code to put an end to egregious loopholes that allow cynical exploitation by this generation’s Robber Barons.

"What makes Google’s activities so reprehensible is its hypocritical assertion of its corporate motto, 'Don’t Be Evil'," he added.

Documents filed in The Netherlands show that the UK is a big market for Google in Europe: it was worth $4.1bn in sales last year. But the company only paid £6m in corporation tax, which is taken as a percentage of profits rather than revenue, in Britain.

When called in front of the Public Accounts Committee, Google veep for sales and operations in Northern and Central Europe Matt Brittin tried to claim that all of the firm's profits went to the US. He said that since all the innovation was happening in California, it was only fair that all the profit went there too.

But Brittin was caught out when he admitted that intellectual property rights were held in Bermuda and so some European money was going to that tax haven, not back to the US. Google swerved paying about $2bn in worldwide income taxes last year by moving $9.8bn to its Bermuda subsidiary. ®

Internet Security Threat Report 2014

More from The Register

next story
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
BT said to have pulled patent-infringing boxes from DSL network
Take your license demand and stick it in your ASSIA
Right to be forgotten should apply to Google.com too: EU
And hey - no need to tell the website you've de-listed. That'll make it easier ...
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
prev story

Whitepapers

Designing and building an open ITOA architecture
Learn about a new IT data taxonomy defined by the four data sources of IT visibility: wire, machine, agent, and synthetic data sets.
5 critical considerations for enterprise cloud backup
Key considerations when evaluating cloud backup solutions to ensure adequate protection security and availability of enterprise data.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Business security measures using SSL
Examines the major types of threats to information security that businesses face today and the techniques for mitigating those threats.