Google wants 'rational tax system' following criticism over firm's lesser tax transparency

Google chairman Eric Schmidt has called for a more rational and predictable international tax system following widespread criticism over the company's failure to have a more transparent tax payment system.

The move comes after Labour Party leader Ed Miliband targeted his rebuke towards Schmidt at the Google Big Tent Conference, the Guardian reports.

UK Prime minister David Cameron's aides have also accused Schmidt who plans to keep greater tax transparency as his agenda for the G8 summit next month.

However, Schmidt refused Milliband's criticism of Google's tax situation as he said that his chief concerns about changes in the tax system might make Google to be 'doubly or quadruply taxed'.

Schmidt said that most American and UK firms operating in US have similar tax structures, adding that if Google pays more taxes in one area, it might result paying lesser taxes in another area.

Schmidt also said that Google follows transparent tax policies and the companies are not the authorities to decide tax payment structures which should be more open.

However, Miliband said that he was 'disappointed' that Google is arguing whether or not it is fair to pay just a fraction of 1% of that in tax despite earning billions of pounds in revenue in Britain.

Nick Clegg also criticised Google at a Downing Street meeting earlier in the week saying that the tax burden on corporations is being brought down by lowering the rate of corporation tax but in return people have to pay their fair share.

Labour party rejected Schmidt's explanation, saying that Google has been making sales to UK customers from its UK staff, but pretending that the transactions were being made from Ireland so the firm could register the profits as made in Ireland rather than the UK.

Google is not taxed on the same profits in different countries; it shifts profits between tax jurisdictions to avoid paying tax, the report added.