Google chairman defends company’s tax position

International tax law "could almost certainly benefit from reform", but it is politicians and not companies that set the rules, Google executive chairman Eric Schmidt has said.

Writing in the Observer , Mr Schmidt conceded that corporate taxation was "rightly a hot topic". However, he criticised British politicians for "a confusing spectacle" in which "legislators are doing the lobbying and companies are articulating the law as it stands".

Most of Google’s product development takes place in the US, which is where it pays the most taxes, he said.

Mr Schmidt suggested that making the rules more transparent would not be easy given it would require the renegotiation of international tax treaties.

Higher overall corporate taxation would likely lead to “less innovation, less growth and less job creation”, he insisted.

British prime minister David Cameron faces a potentially tense meeting with Mr Schmidt when he visits Downing Street this morning. Mr Schmidt is a member of the prime minister's business advisory group, which has its regular quarterly meeting today.

Mr Cameron is expected to lead efforts at next month's G8 summit of world leaders in Fermanagh to find ways of preventing multinational firms from exploiting tax loopholes. Labour leader Ed Miliband told the Observer that if no deal was done a future Labour administration would act unilaterally to make global firms operating in the UK be more transparent on tax.

British MPs have been accused of "demonising" US multinationals after Google was branded "evil" by Labour MP Margaret Hodge, who chairs a parliamentary committee investigating corporate tax affairs. – (Additional reporting: Financial Times service 2013)