Google boss defends controversial UK tax bill
Figures cited by Conservative MP Charlie Elphicke show Google paid only £3.4 million ($5.1 million) in British corporation tax in 2011 on revenues totalling about £2.5 billion, sparking fury in austerity-hit Britain.
But Google's executive chairman, Eric Schmidt, told BBC Radio 4's World at One program on Monday that the company had not acted illegally and had contributed significantly to Britain's economic growth. Defending the company's tax bill, he said: "Of course that omits the fact that we also hire more than 2000 employees and are investing heavily in Britain.
"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."
Mr Schmidt urged critics to consider the "totality" of the company's contribution to the economy. "The fact of the matter is these are the way taxes are done globally," he said. "I think the most important thing to say about our taxes is that we fully comply with the law."
Google has come under closer scrutiny in several European nations where cash-strapped governments are wary of being short-changed on tax revenue.
British MPs last year accused the company of being "immoral" during a committee grilling of Matt Brittin, chief executive of Google UK.
Frequently Asked Questions about this Article…
The controversy arose after Conservative MP Charlie Elphicke cited figures showing Google paid just £3.4 million in British corporation tax in 2011 on about £2.5 billion of UK revenues, prompting public and political anger in austerity-hit Britain.
According to figures cited in the article, Google paid £3.4 million (around $5.1 million) in British corporation tax in 2011 on roughly £2.5 billion of revenues.
Eric Schmidt told the BBC that Google had not acted illegally, urged people to consider the company's total contribution to the economy, and said Google fully complies with the law. He highlighted hiring, investment, and support for start-ups as part of that contribution.
Google pointed to hiring more than 2,000 employees in Britain, heavy investment in the country, and empowering ‘billions of pounds’ of start-ups through its advertising network. The company also said it is a key part of Britain’s electronic commerce expansion that drives economic growth.
Yes. British MPs have been critical—during a committee grilling they accused Google of being 'immoral' when questioning Matt Brittin, chief executive of Google UK.
Yes. The article says Google has come under closer scrutiny in several European nations, as cash-strapped governments are wary of being short-changed on tax revenue.
Schmidt was arguing that the tax arrangements under question reflect common international tax practices and structures, and he used that point to explain why Google believes its approach is lawful and consistent with global tax rules.
Everyday investors should note that tax controversies can create political and reputational scrutiny—especially in Europe—and that companies like Google emphasize legal compliance and broader economic contributions. Investors may want to monitor ongoing regulatory and political developments related to such disputes.
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