Google Defends Itself From Tax Controversy

Eric Schmidt, the chairman of tech giant Google, has defended the company from criticisms over its alleged avoidance of paying income taxes, saying the move is called capitalism.

Google and other global brands have come under fire when some governments accused them of avoiding paying taxes in full. In 2011, Google avoided paying some $1.9 billion worth of global income taxes. Instead, it siphoned some US$9.8 billion into a Bermuda shell company.

The tech giant paid a tax rate of 3.2 percent for its overseas earnings.

The Google chairman said what the company has done and is doing is legal. He reiterated that Google pays its taxes according to what the laws prescribe.

Schmidt added that he is proud of the structure that Google has set up.

Amid accusations that the company is not paying taxes in full, Schmidt said it is called capitalism. He added that he is not ashamed to say that Google is proudly capitalistic.

Vince Cable, Britain’s Business Secretary, is not impressed with what the Google chairman said. The former called on governments to discuss the issue and compel Google and other global brands to make more taxes.

Cable said that although it is capitalism, it does not mean that governments should tolerate or even accommodate it. He added that governments should remedy the current taxation system on behalf of taxpayers.

Britain accounts 11 percent of Google’s overall sales. The country is also the tech giant’s second biggest market. Last year, Google earned US$4.1 billion in UK alone but only paid some $9 million on corporate taxes.