Google has defended paying very little tax in the UK by highlighting its key role in growing economy.

Google Defends UK Tax Affairs
man walks past a poster for Google's Chrome browser in an underground station in central London January 25, 2010.

Having been accused of being immoral by the Public Accounts Committee last year, Google's executive chairman Eric Schmidt has vigorously defended his company's UK tax strategy which saw the search giant paying just £6 million in corporation tax in 2011.

Schmidt, speaking on the BBC Radio 4 World at One show, said it was not fair to take the £6m figure in isolation, and that the company does a lot more for the UK economy than simply contribute directly to the Exchequer.

"Of course that omits the fact that we also hire more than 2,000 employees and are investing heavily in Britain.

"Britain has been a very good market for us. We empower literally billions of pounds of start-ups through our advertising network and so forth. And we're a key part of the electronic commerce expansion of Britain which is driving a lot of economic growth for the country."

In a report published earlier this year, the Public Accounts Committee accused Google, Starbucks and Amazon of "using the letter of tax laws both nationally and internationally to immorally minimise their tax obligations."

Campus London

One of the ways which Google believes it is helping the UK economy and start-ups in particular, is through its Campus London program, a space in the middle of London's Tech City which houses more than 100 young businesses and has more than 10,000 members.To mark its first year anniversary, Google commissioned a study into how Campus has performed in its first 12 months.

According to the study those businesses located in Campus London are seeing strong growth, with 25 percent growing their employee count while 88 percent of Campus start-ups have a positive outlook on their chances of success, with one in four moving on to bigger facilities to house their growing businesses.

Matt Brittin, Google's Vice President for Northern and Central Europe said: "Campus has exceeded all expectations in its first year. The second you walk into the building you can't fail to feel the buzz and energy. As a Londoner, there's no doubt in my mind that something very special is happening at Campus and in London, and we're delighted to be playing a role in it."

Chancellor of the Exchequer George Osborne said: "It's great that start-ups in Tech City are confident, growing and creating jobs. Since I opened it a year ago, Google Campus has been playing an important role in building that success."

Further research from Barclays backs up Google's claims. The research from the UK bank says companies selling their services predominantly online were growing by an average by 11.4 percent in the last three years, over 50 times faster than GDP growth of 0.2 percent over the same period.


High-growth technology companies typically have less than 100 employees and on average have annual revenues of £8.9m, with 25 percent based in or around London the Barclay's research revealed. David Cameron has been keen to develop the Tech City hub in East London, pledging £50m to redevelop the Old Street roundabout, creating "Europe's largest indoor civic space."

Google has also announced additional investment in London, with plans for a £1bn headquarters in Kings Cross, with construction on the 11-storey building due to begin this year.

Schmidt added that at teh end of the day the most important thing is that Google complies with the UK tax laws and will continue to do so:

"So from our perspective I have to look at it in totality. You're describing the way taxes work globally. And the fact of the matter is these are the way taxes are done globally. The same is true for British firms operating in the US, for example.

"I think the most important thing to say about our taxes is that we fully comply with the law and obviously, should the law change, we'll comply with that as well."