Eric Schmidt, Google's executive chairman, has described the international tax regime as an 'irrational structure' and said that multinational companies could not try to obey 'the spirit of the law' when they operated in many jurisdictions and had a duty to their shareholders.

Schmidt's comments were made in a debate at the Google Big Tent conference in which he said: 'I can't defend the international tax regime. I did not design such an irrational structure. It would not have been designed this way by a computer scientist.'

The boss of Google indicated that he welcomed the focus on corporate tax avoidance at the forthcoming G8 summit and said the company would be 'completely transparent' about its arrangements.

Countering criticism that most of Google's taxes on money earned in Britain are funnelled through Ireland and Bermuda, with the company paying an effective rate of less than 1%, Schmidt said: 'Virtually all of the American companies have tax structures like this. And there are analogous structures for European companies in America. But governments have a lot more power than we do. We have to follow the law and if the law changes we will absolutely follow it.'

'I don't think companies should decide tax policy, governments should,' Schmidt said.

David Cameron, speaking at an EU summit in Brussels, said he had included Schmidt in discussions held in advance of the G8 meeting and had asked him for comments. Cameron said that addressing the issues on the basis of the actions of one company or another would not solve the problems of multinational tax arrangements, and that 'proper concrete action' was required.