The Conservative Party's links to Google have come under fire after the internet giant's boss said he was "proud" of his company's tax avoidance schemes.
Google is reported to have made £2.6bn in the UK last year, but paid just £6m in corporation tax by funnelling money through Bermuda.
But its chairman Eric Schmidt said yesterday he would not pay more money than he legally had to just because he felt "sorry" for the British taxpayer.
Schmidt has close links to the prime minister , chancellor and Conservative Party and served as an economic adviser to the Tories while they were in opposition.
Between June 2010 and May 2012 there have been at least 23 meetings between Tory ministers and Google.
Osborne is reported to have held four meetings with Google since the election and David Cameron has met executives from the company three times - prompting public accounts committee (PAC) chair Margaret Hodge to say the chancellor and prime minister "should have taken greater care of who they chose to be their friends"
"It's shocking that any credibility should be given, or the patronage of either the prime minister or chancellor's office be given, to a company that blatantly manipulates transfer pricing rules to avoid its proper obligations to British society," Hodge told The Huffington Post UK.
She added: "It reaffirms my strong belief we need better transparency about how people arrange their businesses."
On Wednesday Schmidt told Bloomberg: "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.
"It’s called capitalism. We are proudly capitalistic. I’m not confused about this."
Big multinationals have come under fire in recent weeks for structuring their European operations in such a way that allowed them, legally, to avoid paying millions in tax.
The chancellor has previously called aggressive tax avoidance "morally repugnant" and announced plans to beef up HMRC in his Autumn Statement.
"There are still too many who illegally evade their taxes, or use aggressive tax avoidance in order not to pay their fair share," he told the Commons.
He added: "Hundreds of millions of pounds of tax loopholes are being closed with immediate effect."
The PAC has previously slammed the tax avoidance measures used by some global companies as "immoral".
In February, Osborne and Schmidt penned a joint article in the Financial Times promoting Europe as a "technology centre”.
In March, the chancellor opened Google's new campus in the 'Tech City' development in Old Street, hailing the "partnership" between the government and the company.
Meanwhile Rachel Whetstone, the former adviser to Michael Howard and wife of former top Cameron aide Steve Hilton, serves as global head of communications and public policy for the firm in California.
In 2009 Cameron, then leader of the opposition, set up an economic recovery committee comprised of shadow Tory ministers and business leaders with Schmidt appointed as its international business adviser.
And in 2006, Schmidt spoke at the Conservative Party conference. Cameron also spoke at the Google Zeitgeist Europe conference in the same year, where he lavished praise on the "truly amazing" technology giant.
The Treasury said the chancellor would not be having any conversations with Schmidt about his remarks because ministers do not speak to companies or individuals about tax.
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