But Mr Brittin said MPs were blaming companies for a system that they had designed. "Google plays by the rules set by politicians," he said. "The only people who really have choices are politicians who set the tax rates."
Insisting that Google pays its tax in America, Mr Brittin said: "I would love it if Google had been invented in Cambridge...if Google had been created there and was a British business we'd be having a very different conversation now. We would be paying tax based on where our product was created – in that case, we'd be paying the majority of our tax here and operating in the US in a very different way."
However, last night a top executive at supermarket chain Morrisons became the latest retail heavyweight in the UK to call on the Government to force foreign firms to pay more tax. Richard Pennycook, finance director of Morrison's, told Sky's Jeff Randall Live: "We want a level playing field. What applies to one company should apply to another. There are big differentials in what companies are paying." He added: "The Chancellor must look into this and regulate. Taxes on activity here in the UK should stay here. Transparency is very important."
Morrisons said it paid £281m in UK corporation tax, more than a quarter of its profits. By comparison Aldi, the German-owned supermarket rival, paid £12.7m of UK corporation tax, or 17.7pc of its £70.5m profits. In a statement Aldi said it had "always respected and complied with the tax laws."
Meanwhile, French ministers signalled they are ready to change the laws to force online companies to pay full levies on earnings made in France. Fleur Pellerin, the French technology minister, told reporters: "There's a serious issue around fiscal harmonisation in Europe. There's a will to change this in Europe but the timeline is too slow. Tax rules set at a time when commerce was physical are not appropriate any more."
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