Schmidt defends Google’s low tax payments

Defending his company's low tax payments in the UK, Google executive chairman Eric Schmidt said the company followed the letter of the law and made a positive contribution to the UK economy.

The internet search company along with, Amazon.com and Starbucks Corp was last year accused by a UK parliamentary committee of "immorally" minimising their tax bills (See: UK lawmakers to quiz Starbucks, Google, Amazon over tax avoidance)

In a radio interview with the BBC, Schmidt rejected the criticism.

He said he thought the most important thing to say about the company's taxes was that it fully complied with the new law and it would continue, if the law changed.

Google's UK sales stood at billions of dollars each year, though, from 2006 to 2011, the last six years for which accounts were available, the company had a net tax credit because tax payments were exceeded by tax credits.

These credits could be used to offset future profits.

Nonetheless, according to Schmidt, Google helped drive growth in the UK economy. "We empower literally billions of pounds of start-ups through our advertising network and so forth," he told the BBC.

"And we're a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country."

Defending the internet giant's tax record, Schmidt said the firm was playing a key role in the UK's high-tech growth.

Google paid only £6 million in corporation tax in 2011, but according to Schmidt, the arrangements "fully comply with the law" and it was acting in the same way as other firms.

Matt Brittin, CEO of Google UK, giving evidence before the Public Accounts Committee last year,  insisted the firm complied with the law in the UK and had not breached its own "Do No Evil" mantra.

However, committee chairman Margaret Hodge told him, the company was not being accused of being illegal, it was being accusing of being immoral.