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Google: 'Profit's A Dirty Word'

By Oonagh Reidy | Monday | 20/05/2013

It's not us, it's them: Google Chair defends "evil" accusations, blaming governments for the global tax system

After the outcry in the UK last week at Google's tax affairs, Chairman Eric Schmidt has come out with a weak defence, handing out the usual line about 'less company tax, more jobs and investment = happy days.' 

In an article penned for The Observer in the UK, he insisted for big multinationals, corporation taxation is "much more complicated."

"While profit has become something of a dirty word, it's important to remember that many corporations reinvest their profits in research and product development, which in turn tends to lead to job creation, further economic growth and, ultimately, more tax," writes Schmidt. 

He also points out the tech giant, whose profits are swelling by the quarter ($3.35 billion last qr), paid $2bn in corporate income taxes in the US, its home country, last year. 

Google squeezing governments left, right and centre
Schmidt then dragged out the same old threat that multi nationals have been hanging over the countries in which it operates for years. 

"It's tempting for every government to assume that they will benefit if and when the current structure changes. But in reality, it's probably only a significant increase in corporation taxes globally that would make every country a "winner" - and the consequences of that would likely be less innovation, less growth and less job creation."

And no government wants that.  

He also blames the international tax treaties (and politicians) for the way the global tax system operates, rather than acknowledging the actions of Google, along with Apple, Facebook and a slew of others, which all made a strategic decision long ago to funnel their revenues through low tax nations like Ireland ('Double Irish'), The Netherlands ('Dutch Sandwich') in a bid to minimise their tax bills. 

Small economies like Ireland are more than happy to house Google, Apple and Facebook's European Headquarters, which employs thousands, and carry on charging minimal tax rates in a bid to keep the big techies in the country. 

The Irish government are fighting hard against EU pressure to up its corporation tax rates. 

Meanwhile, UK, Aussie and other governments are getting fed up of the big MNC's taking full advantage of tax loopholes.  

However, Google Chairman does admit "international tax law could almost certainly benefit from reform."

"As a company that has always aspired to do the right thing, we understand why Google is at the centre of that debate."

However, he warns "change won't be easy because it will require the renegotiation of international tax treaties, not just action by individual nation states. And many of those countries will doubtless have competing interests."

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