Guardian News and Media/London
Google will not oppose any moves by the government to tighten up the tax regimes that has allowed it to use Bermuda as a tax haven, its executive chairman Eric Schmidt said.
Speaking at Cambridge University, the chief of the world’s biggest search engine reiterated his position that Google would abide by any changes the UK imposed: “Our tax strategy is that whatever the tax regime, we would pay that.”
It comes just days after David Cameron called on other world leaders at Davos to crack down on tax avoidance.
“When some businesses aren’t seen to pay their taxes, that is corrosive to the public trust,” he said. “I want this year’s G8 (meeting of the largest economic powers) to bring a new focus on tax (and) transparency. Those are the issues we are going to be driving for this year. We want to use the G8 to drive a more serious debate on tax evasion and tax avoidance.”
He added that “people across the planet are rightly calling for more action”.
Google used the tax haven of Bermuda for £6bn of transactions, while paying just £6mn in corporation tax in the UK, in 2012.
It defines the UK staff and operations as a “service arm” of the business, and uses an Irish subsidiary to collect advertising revenues from the UK and other countries.
That pays royalties to another Irish subsidiary, which passes payments to a holding company in the Netherlands with its tax base in Bermuda.
Google legally avoided paying around £200mn on £2.6bn of UK revenues through the arrangement.
In Davos, Cameron said that “there’s nothing wrong with sensible tax planning but there are some forms of avoidance that have become so aggressive that I think it is right to say these raise ethical issues.”
Schmidt declined to comment directly on Cameron’s comments, but did acknowledge that corporations now had to recognise that they were dealing with a very different world from before.