David Cameron has called on European governments to collectively tackle corporate tax avoidance, following Google chief executive Eric Schmidt's remarks that governments should sort out the system.
Cameron made the calls at a news conference following an EU summit on energy and tax policy, and was supported by comments made by leaders in France and Germany, according to multiple reports. "There is a real chance international action can fix this problem," he said. "You can't do it on your own; you have to have that international action."
Google's tax avoidance in the UK has again caught public attention, following a speech by Schmidt suggesting the firm's current approach is just "capitalism".
Labour leader Ed Miliband hit out at the search giant in a speech on Wednesday: "I can't be the only person here who feels disappointed that such a great company as Google, with such great founding principles, will be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it's fair that it should pay just a fraction of one per cent of that in tax," said Miliband.
"When Google goes to extraordinary lengths to avoid paying its taxes, I say it's wrong. The government should be putting forward proposals now to make this happen at the G8. Those proposals should guarantee country-by-country reporting transparency to show how much profit firms are making and tax they're paying."
Google currently processes the majority of its UK profits through Ireland to avoid paying taxes. In response to Miliband's comments, Schmidt rejected responsibility for tax avoidance and suggested it was the government's responsibility to sort out the system.
"I don't think companies should decide what tax policies should be. I think governments should. All of us are operating in a very, very longstanding tax regime which was set up for various reasons that don't necessarily make sense to me or anyone else. But they are the way the global tax regime works."
He added: "We are trying to do the right thing. We are not trying to do the wrong thing."
Apple and Amazon are other tech companies that have been heavily criticised for avoiding taxes, with Apple recently taking to the US Congress to defend its tax practises.
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