British Prime Minister David Cameron on Monday told Google's executive chairman Eric Schmidt and other business leaders that he expected their companies to pay their taxes in exchange for benefiting from low tax rates.
Cameron's intervention came days after British lawmakers accused Google of using "smoke and mirrors" to avoid paying tax, fuelling a debate over corporate taxation that has angered the public and led to calls for a tougher approach from the government.
Cameron was speaking at a regular quarterly meeting of the government's business advisory group attended by Schmidt at which corporate taxation was discussed.
"He said, on tax and transparency, that as part of having very low corporation tax he expects companies who are due to pay tax, to pay that tax," a government source said.
All those present at the meeting agreed with Cameron's position, the source said.
Britain holds the G8 presidency and will host a meeting of G8 leaders on June 17-18 at a golf resort in Northern Ireland. Cameron said in April that tax compliance was one of his G8 priorities, along with trade and financial transparency.
Earlier on Monday, Cameron wrote to Britain's overseas territories, urging them to "get their house in order" over the sharing of tax information.
Google is one of several high-profile companies to face far greater scrutiny of its tax affairs in recent months. Apple Inc., Microsoft and Amazon.com have all been in the spotlight at a time of weak economic growth, high levels of public debt and squeezed household incomes in Britain.