CEO Sundar Pichai says Google won't pay more tax until laws change

Pichai defends Google's European tax payments after its offices are raided

Google will not be paying any more tax until international laws force it to, CEO Sundar Pichai has said.

Pichai has defended his the company's tax practices, explaining that most companies pay the majority of their taxes in their home countries.

"As a global company, we find ourselves between the conflicting priorities of international tax law," Pichai told German newspaper Welt am Sonntag (via the Independent).

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The company's taxes have landed it in hot water with multiple European governments, and tax officials have raided Google's offices in both Paris and Madrid in recent months. The company was also criticised for paying a UK corporation tax bill of just 130 million.

The controversy centres around Google basing European operations in countries with low tax rates, such as the Republic of Ireland. Offices in countries like France, Spain and the UK, it has claimed, merely act in a 'supporting role' for these larger headquarters, which mean the company can pay a lesser rate of tax than if they were fully-functional branches.

But Pichai said Google abides by current international tax regulations, saying: "Only the further development of the global tax system by politicians can lead to better results."

He added that Google had invested "very heavily" in Europe, and warned that Brexit could have a huge impact on digital businesses. "As companies we see great value in Europe as a unified digital market," he said.

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The company currently employs roughly 14,000 people across the EU, and Pichai cautioned that more diverse regulation could prove difficult to keep up with. "The complexity makes a bigger commitment difficult, which can be seen in investments," he said.

30/06/2016: Spanish taxman 'raids Google's Madrid offices'

Tax investigators in Spain have raided Google's Madrid offices as part of an inquiry into tax evasion and fraud, according to Reuters.

The investigation comes barely a month after the search giant's headquarters in France was searched on suspicion of tax evasion.

The firm said in a statement that it complies with all Spanish fiscal legislation just as it does in all countries it operates in. IT Pro has contacted Google for comment.

The raid was approved by a Madrid court after a request by Spain's tax authorities. Media reports in Spain said that the probe was in relation to suspected tax fraud and tax evasion. It will also look at value-added tax and the payment of non-resident taxes.

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Tech companies and multinationals have come under fire in recent years for using loopholes in laws to minimise tax bills. Google, which now forms part of Alphabet, has sales staff in the Republic of Ireland who conclude all sales contracts in that country. The arrangement has been scrutinised by European tax authorities.

In January, the firm agreed to pay HMRC 130 million in back taxes to cover a decade of underpayment. However, this was criticised as a "sweetheart deal" and resulted in uproar from MPs and tax campaigners, who accused the HMRC as being complicit in allowing Google to route UK sales through Ireland. France is also seeking 1.2 billion in back taxes from the firm. 

The tax raids have added to Google's European woes. The firm is facing pressure from the European Commission and is set to make a new official complaint about alleged abuses of market power connected with its online advertising and shopping business.

It also faces antitrust charges stemming from its Android operating system.

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