Eric Schmidt, Google's executive chairman, has repeatedly said that Google pays the tax it is required to by international law. Sources at the company say politicians should set tax rates, and should consider Google is located in Ireland, in part because of its attractive tax regime.
Google points out it has made a £345m property investment in the UK, including a new campus at the redeveloped King's Cross in London. It also claims that its overall 2012 total UK tax contribution is £156.1m.
"We can only pay corporation tax according to the law," the source said. The company has 2,000 employees in the UK and pays a global tax rate equivalent to 20pc, it claims.
Google, however, has been battered by negative headlines around its tax affairs, and has
twice been called to defend its avoidance of UK corporation tax to MPs on the Public Accounts Committee, and was forced to deny misleading Parliament over whether British staff actually sell advertising.
Margaret Hodge, chairman of the committee, has claimed Google's approach to tax meant "it did do evil", contrary to its corporate motto. Mrs Hodge called earlier in the summer for David Cameron to intervene over Google's tax affairs, arguing that the company had a moral obligation to contribute more to society.
She said it was "no excuse" for the Prime Minister to claim tax avoidance was a global problem.
But Conservative MP Andrea Leadsom argued last night that HMRC was to blame rather than big businesses for the wider issue. Speaking at a fringe event at the Conservative Party conference, Ms Leadsom said the problem was "our own incompetence".
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