Google is a country.
A barrister asks on tax: “You said you’ll comply with the laws, will you comply with the spirit as well, because they’re very different things.”
Schmidt: “You’ll have to explain the distinction. I take a relatively straightforward view.”
Barrister: “If somebody comes into to say I’ll restructure to let you keep 82% of your earnings ... that means I’m keeping with the letter of the law, but the spirit says as a barrister I should be in that high bracket paying above 40% to 50%, and I’m keeping HMRC away from my money. If given that chance to restructure to abide by the letter but not spirit ... which choice?”
Schmidt: “We’re governed by US securities law.. in that scenario it might be seen as incompetence, and you could classify some of it as a donation ... that exhausts my understanding of international tax law. But internationally we’re governed by many legal jurisdictions, not just the UK’s.”
Krishnan Guru-Murthy: "Capitalism – it means different things in different places? It’s absolutely worshipped in the US but not in the UK?
Schmidt: “Google is a capitalist country ... company.” (In front of the TV cameras, oh my.) “It’s easy to say you would like us have less profits and have that somewhere else – we will comply with the letter of the law but we’re trying to avoid being doubly and triply taxed which would prevent us investing in some of the wilder things.”
Updated at 3.18pm BST
Stella Creasy MP: “How would you reform our tax system?”
Schmidt: "Personal answer: when you have high differential tax rates you will have widely divergent outcomes, you have this in the US where you have lots of different rates. There’s some feeling this is good because it makes governments moderate ... this is a big fight in the economics community.
“Have a rational system that’s predictable and doesn’t change very much. I don’t think taxes should be the same everywhere – they’re a cultural construct.”
Schmidt: “Taxes are not a choice.”
Q (from Krishnan Guru-Murthy): “The way you use transfer pricing, Ed Miliband says that’s wrong. You’ve taken a decision to put a lot of money in Bermuda, and you take moral positions in lots of other areas.”
Schmidt: “If the international tax regime changes we will too.”
Q: “But is that moral?”
Schmidt:"Virtually all the American companies have tax structures like this, and UK companies operating in the US do too. But if we pay more taxes in one area then we pay less in another."
Q to critics it feels like Google is outmaneouvring the governments.
Schmidt:"Governments have a lot more power than we do. They do. If the law changes, we will follow it ... we don’t negotiate taxes, they are the law."
Q: “But what about how much money you send to Bermuda?”
Schmidt: “I don’t personally know, but we absolutely disclose it.”
Updated at 3.06pm BST