Google's Eric Schmidt: UK Should Change Tax System, Google Not to Blame
May 28, 2013 10:05 AM
comment(s) - last by
He said Google pays exactly what it's supposed to pay
The United Kingdom has been looking into the tax-paying practices of large companies, and Google's Eric Schmidt doesn't see the big deal.
Schmidt, Google's executive chairman, defended Google -- which was criticized for profit shifting and dodging larger tax payments -- saying that the UK should change its tax system if it wants large companies to pay more or less each year.
"What we are doing is legal," said Schmidt, referring to Google's UK tax payments. "I'm rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional. I view that you should pay the taxes that are legally required. It's not a debate. You pay the taxes.
"If the British system changes the tax laws, then we will comply. If the taxes go up, we will pay more, if they go down, we will pay less. That is a political decision for the democracy that is the United Kingdom."
Earlier this year, it was reported that
Google avoided paying about $1.6 billion USD
(£1 billion) in UK taxes. Google sent £6 billion through Bermuda over the course of the year, which halved its 2011 tax bill. In fact, Google funneled 80 percent of its global revenue through the island and ended up paying about £1 billion less to the government.
David Cameron, the Prime Minister of the UK, said that companies like Google are immorally minimizing tax bills and need to be stopped.
Just last month, the
UK openly stated that it was concerned
with the fact that Google only paid £6 million ($7.8 million USD) in UK corporation tax. Schmidt defended Google at that time as well, saying that Google "empowers literally billions of pounds of start-ups through our advertising network" and is "a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country."
Google isn't the only large company under the microscope. Apple is also being questioned for profit shifting, where it made an estimated £6B ($9.50B USD) in Britain last year, but
paid only £10M ($15.8M USD) in taxes
. Apple was able to do this because of the British tax code's rule that largely exempts companies based in Ireland from paying British taxes.
Apple CEO Tim Cook offered
tax reform proposals
to U.S. Congress at a Senate hearing last Tuesday in an effort to bring back foreign earnings to the United States. Furthermore, he's suggesting that this money be invested in research and development and creating jobs in the U.S.
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5/29/2013 12:17:45 PM
No. Motoman is right, it is not illegal. It may be a loophole in the system but it's legal.
Fortunately, the world agrees when it comes to accounting methods and principles. The world does not agree on tax laws and it's vastly different between countries. Google just use the difference in international tax laws to lower their tax burden. It is perfectly legal.
I would say it is immoral in general to evade taxes. However, politicians are just as dirty. In this case, it's the pot and the kettle. They're just playing the blame game but I'm going to support Google as the lesser of 2 evils.
5/30/2013 4:08:04 AM
No. Motoman is right, it is not illegal
Firstly, don't defend a moron. Secondly, the distinction between what we and Motoman are claiming is NOT that I am saying it's illegal and he's saying it's legal.
It's obvious and plain that tax avoidance is legal. You can utilise the system to gain the maximum benefit you wish provided you do so legally.
The ISSUE with the system is that a LIE you make can determine whether or not it's legal to claim one tax or another. The loopholes are ways in which you can lie without it ever being provable. That's why it's legal. If there was an objective legal test as to whether you were actually trading in say, the Isle of Man - it would become illegal. Google isn't simply using the 'difference in international tax laws to lower their tax' - they are claiming factually false sources of revenue and bases of trading in order to benefit from different international tax laws. That's very different.
It's clearly immoral, it causes public outrage, it's bad for sales, publicity, it's being clamped down on now (significantly) and there is a very real threat of having to pay all the taxes you SHOULD have paid retrospectively, including damages. If it was not illegal this would simply not be an option. It's very much down to interpretation which side of the 'tax evasion / tax avoidance' debate each scheme site, and the government has made it very clear where it believes they sit.
"Death Is Very Likely The Single Best Invention Of Life" -- Steve Jobs
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