Google's deal to pay £130m in corporation tax was not a "glorious moment", business secretary Sajid Javid has admitted, but has insisted it will change behaviour.
Google also defended the payment, saying it doesn't have a so-called sweetheart deal with the government or HMRC and pays a rate of 20 per cent in the UK and globally.
The pay deal, agreed last week, was hailed as "a victory" by George Osborne, however, the chancellor has faced a large amount of criticism that the deal is unfair and seen as small in comparison to Google's billion pounds of profit.
Appearing on the BBC's Andrew Marr Show, Javid admitted it was not a "glorious moment" and that many other businesses would see it as unfair, but insisted the government has taken "a lot of action to deal with this problem" and the latest move from Google would help change behaviour.
"We've closed 40 tax loopholes which in themselves have raised over £12bn in the last five years. We've led the way at the G20 and the OECD to have more international tax transparency," said Javid.
"The world of business has changed dramatically" he added, and rules need to keep up with that .
Javid also said it was not the case that the British government was defending Bermuda as a tax haven. According to The Observer, the UK government has lobbied the EU to keep Bermuda off a tax haven blacklist.
Google's head of public policy Peter Barron, also appearing on the show, defended the US tech company, saying it had paid the £130m of additional back taxes over the past 10 years after a review and audit by HMRC and that identifying exactly where the economic activity that produces profits comes from was a "difficult business".
He said Google would like to see more simplicity and clarity to the UK's tax system, "not least because we would like to be paying the right amount and be seen to be paying the right amount".