Google's Schmidt 'very proud' of tax avoidance scheme
Summary: The company's chairman has defended the complex arrangement that sees its UK profits largely funnelled to Bermuda, via Ireland and the Netherlands. 'It's called capitalism,' he said in an interview on Wednesday.
Google chairman Eric Schmidt has said he is proud of the company's tax structure, which has been heavily criticised by lawmakers around the world.
Google paid the UK tax authorities £6m for 2011 despite turning over £395m, in an arrangement that involves sending its proceeds to a Bermuda shell company via Ireland and the Netherlands. The firm was, alongside Amazon and Starbucks, one of the corporations that came in for a grilling by UK MPs last month over the issue of tax avoidance. A parliamentary committee subsequently described the complex avoidance schemes as "utterly immoral".
In an interview reported by Bloomberg on Wednesday, Schmidt said the company was simply engaged in "capitalism".
"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," Schmidt said. "It's called capitalism. We are proudly capitalistic. I'm not confused about this."
The Independent also reported Schmidt as saying the company was only paying the British taxman what it had to.
"To go back to shareholders and say, 'We looked at 200 countries but felt sorry for those British people so we want to [pay them more]', there is probably some law against doing that," he was quoted as saying.
The newspaper also quoted a response from Margaret Hodge, the MP who chaired the Public Account Committee that had criticised Google.
"For Eric Schmidt to say that he is 'proud' of his company's approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK," Hodge said. "Ordinary people who pay their taxes unquestioningly are sick and tired of seeing hugely profitable global companies like Google use every trick in the book to get out of contributing their fair share."
Google has its international headquarters in Dublin, largely because the Irish government offers generous tax breaks. This means that Google's UK proceeds go to Ireland, along with most of the profits it makes in other countries outside the US. However, in a complex process that is nominally based on intellectual property licensing, much of that cash then goes through a Dutch holding company to a Bermuda holding company, which supposedly protects Google's intellectual property.
As the Public Accounts Committee noted in its report, all Google's non-US-derived profits go to Bermuda, so the company "may be depriving the USA of legitimate tax revenue as well as the UK".
While testifying to the committee, Google's vice president for Northern and Central Europe, Matt Brittin, justified Google's low corporation tax payments in the UK by saying that "all of the engineering work is done in California".
This came as a surprise to Google's London office, which — according to the firm's own website — is "one of Google's largest engineering operations in Europe", having been instrumental in developing "Voice Search, Local Search, Maps, TV, YouTube and core infrastructure".
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Talkback
No, it's called tax evasion
Not when done by Corporations
Why should Google give money out to those who have not worked?
It's called taxes, idiot!
Robbery is better?
Really?
What you suggest is not only illegal and unconstitutional, but also immoral. Next thing you are going to tell us that some people's votes should count more than mine because they paid more taxes than me.
Despite Republicans vastly outspending Democrats, cynical gerrymandering and attempts to disenfranchise voters in states with Republican control, The Democratic party still holds the presidency, improved their majority in the Senate and gained seats in the House. Apparently what you find galling is that a majority of people voted for their self-interests rather than the interest of those that spent so much to try to get them to vote for theirs.
Comparing Apples and Oranges.
But, hey, tell you what
You're Proud of the last 4 years?
You Mean 6 Years, Don't You
Really?
What you suggest is not only illegal and unconstitutional, but also immoral. Next thing you are going to tell us that some people's votes should count more than mine because they paid more taxes than me.
Despite Republicans vastly outspending Democrats, cynical gerrymandering and attempts to disenfranchise voters in states with Republican control, The Democratic party still holds the presidency, improved their majority in the Senate and gained seats in the House. Apparently what you find galling is that a majority of people voted for their self-interests rather than the interest of those that spent so much to try to get them to vote for theirs.
If
At what point does a person give up their civil rights?
Do we curtail other civil rights too? Examples in history where civil rights, citizenship, were curtailed based upon any criteria seems to be something a fair and just society would want to avoid. Rome was a Republic too for a while, even though it tolerated slavery. Not everyone could be a citizen. Are you proposing citizenship tests based on some criteria?
BTW, everybody pays taxes, even the most destitute. They at the very least pay sales taxes. And people receiving Social Security benefits are now paying Medicare taxes out of those benefits, whether they use Medicare or not.
Furthermore, oil corporations making record profits quarter after quarter are getting tax subsidies. Should those receiving tax subsidies be allowed to lobby Congress? Should they be prohibited from making political contributions?
I don't understand where this kind of thinking is coming from.
Oil corporations do not receive tax subsidies
Oh, and just FYI, oil company profits are the same as they have been for years: 3% to 5%
The original framers of our government
I Think They Forgot
"Jobless to be denied vote!"
Your comment implicitly assumes that everyone relying on benefits is only interested in what they can filch from the pockets of more upstanding citizens who have jobs. It is not only offensively patronising but comic stereotyping of the worst kind.
There are currently many millions of people who are jobless because of the economic and financial collapse of the last few years, and millions more out of work as governments cut public service jobs. In your tidy, if unremittingly bleak, world none of these are now interested in electing governments that might actually work to stimulate economies. What they are, in fact, solely interested in is getting more and more of your tax money to fund a lifestyle of scrounging and watching daytime TV.
We live in democracies. This means that people we don't like have the vote too, which means that parties we don't like might get elected to government. If you want to change our political infrastructures you'll need slightly more than "people on benefits just want more of my money, so they can't have the vote" as a political philosophy.
India
Nope. Even when done by people like us its called
The laws need to be changed so that corporations can't do that.
Though the last 2 paragraphs do make it sound like Google
"While testifying to the committee, Google's vice president for Northern and Central Europe, Matt Brittin, justified Google's low corporation tax payments in the UK by saying that "all of the engineering work is done in California".
This came as a surprise to Google's London office, which — according to the firm's own website — is "one of Google's largest engineering operations in Europe", having been instrumental in developing "Voice Search, Local Search, Maps, TV, YouTube and core infrastructure".