Google chairman Eric Schmidt has encouraged the UK government to open up a debate about reforming international tax laws, a week after the firm had been heavily criticised for "doing evil" by the chair of the public accounts committee, Margaret Hodge.
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"The UK government has the perfect opportunity to take the lead in shaping this complex debate at the G8 summit next month. We hope George Osborne seizes the initiative and makes meaningful tax reform one of the top items on the agenda," Schmidt wrote in the Observer.
Schmidt defended his firm for only paying £6m in corporation tax on £3.2bn sales in 2011, stating that corporation tax should be paid on a company's profits, not its revenues, and that the amount of profits made in the UK is harder to determine as the company has a global presence.
"This system [of paying more tax in the country where they are based] ensures that the same profits are not taxed twice or even more than that, across different countries, something that would reduce any company's ability to invest in future research or new jobs," he said.
This was the first of three principles that the Google chief "hoped most people could agree upon".
In his second "principle", Schmidt suggested that politicians, not companies, set the rules, and that this leads to a perplexing situation for the public.
"When legislators are doing the lobbying and companies are articulating the law as it stands, it's a confusing spectacle for everyone," he said.
Schmidt's third and final "principle', was one of contrast to his statements in December when he said "we pay lots of taxes; we pay them in the legally prescribed ways. 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".
He instead talked up the potential for reform, acknowledging the idea that international tax laws may be outdated, particularly for technology firms like Google.
"Given the intensity of the debate, not just in the UK but also in America and elsewhere, international tax law could almost certainly benefit from reform," he said.
