As the sun sets on Ireland's controversial corporation tax year, the €13bn Apple tax debacle remains the most high-profile feature on the country's Foreign Direct Investment (FDI) landscape.
FDI is a cornerstone of the economy and is mainly comprised of the US multinationals operating here, the jobs they create and their contribution to economic growth. There are over 700 US multinationals now operating in Ireland and they account for about 340,000 jobs around the country, both directly and indirectly.
To date, our FDI policy has been very successful but the Government has increasingly been accused of being a one-trick-pony - in that we have become too dependent on it.
This comes at a time of a number of threats to this policy, even as the EU ups the ante in its bid to eradicate tax avoidance other countries are planning to cut their corporation tax rates.
One of the main planks of our FDI policy is our 12.5pc corporation tax rate and these multinationals have flocked here partly because of that.
Ireland offers other attractions for these companies, of course, including a skilled labour force and a pro-business environment.
Annual corporate tax receipts exceed €7bn and as Ireland moved from an agri-driven economy to one more dependent on FDI, the growing contribution from the multinational sector reflects this. Economists have warned that these upcoming threats may erode this tax base and negatively impact on our economic growth. "Corporation tax receipts are a big driver and if there was any erosion there would be repercussions," said Alan McQuaid, chief economist at Merrion Stockbrokers. "Our business model is high tech and pharmaceuticals now and any change in that regime does pose a risk to our tax model and growth rates," he added. "Those corporate tax receipts, while not the biggest element in tax income, were particularly important post the Crash. They kept the economy going."
Concerns about an erosion of the tax base come as the European Commission plans to introduce a common consolidated corporate tax base (CCCTB) in the coming years. The plan is designed to strengthen the single market, and it offers multinationals one set of rules to calculate their taxable profits in the EU, rather than dealing with different national systems.
It includes a proposal to ban transfer pricing, a practice that allows multinationals to cut bills by shifting profits through low-tax countries such as Ireland. While our low corporation tax of 12.5pc is not directly threatened by the EU strategy, its benefits would be undermined, economists say.
Under the CCCTB proposals, tax would be allocated in a way that benefits larger economies where these companies would typically have a greater percentage of sales, assets and employees like France, Germany and Italy.
Peter Vale, tax partner at Grant Thornton said: "CCCTB is a threat to Ireland in that it dilutes the benefit of the low corporation tax rate. It reallocates profits in a way that is unfair to small countries and the portion of profit left in Ireland, in most cases, would be significantly smaller."
The bigger member states have largely rowed in behind the plan while countries like Ireland, the Netherlands, Denmark and Estonia are expected to resist the changes. Economist Seamus Coffey was equally pessimistic and recently told a Dail Committee that changing the rules would dramatically undermine the tax base here. "It is not unduly pessimistic that Ireland could lose up to 50pc of our current corporation tax base if the CCCTB is to be introduced," he said.
CCCTB has two elements - the common tax base would be established first with the more controversial issue of consolidated tax bills coming later. It has generally been accepted that the common tax part of the plan would be more palatable for Ireland and other smaller states.
But other smaller states are expected to join Ireland in the fight against change, with stronger resistance expected to the consolidation side of the argument which would be more damaging.
The issue of CCCTB is a matter for the Ecofin Council of finance ministers, but the agenda can also be driven by whatever country has the EU presidency. Malta holds the EU presidency for the first six months of 2017 followed by Estonia.
While Estonia has already come out against CCCTB, there is still a possibility that it could put it on its presidency agenda.
Public pressure can come into play in these situations. The Dutch government came out in favour of country-by-country reporting by multinationals when it had the presidency last year.
Having said that, CCCTB would have to be ratified by every member state and while movement on the common tax base aspect of the plan would be more likely in 2017, an agreement, if ever reached, on the consolidation side, is likely to drag on.
The issue is not just an economic one for the Government and the country's reputation also needs to be considered. It has said it will engage in negotiations with the European Commission, but it would obviously have reservations about any move that would intrude further into corporation tax policy.
In addition, many of those opposed to the introduction of CCCTB, have pointed to the OECD's new international tax standards designed to tackle base erosion and profit shifting (BEPS).
However, a spokesman for the European Commission said they are not enough.
"If each member state implements BEPS in its own way, this could create new loopholes for tax avoiders and new burdens for businesses in the Single Market. Some BEPS measures also need to be adapted to be EU-law compliant," he said.
"In addition, not all member states are OECD members. If some member states do not apply essential anti-avoidance measures, it will undermine the efforts of all the others," he added.
Aside from moves in the EU, our FDI/corporation tax strategy is facing headwinds from the US and countries like the UK have vowed to drop their rates further to increase competitiveness.
US President-elect Donald Trump has singled out Ireland's low corporation tax regime and has promised to lure multinationals back with the promise of a 15pc rate cut from 35pc currently.
In addition, UK Prime Minister Theresa May has said the UK will have the lowest corporation tax rate of any G20 country by 2020.
The stakes are high as we sail into 2017. The Apple tax row is a case in point. The battle lines are drawn and the row is heading towards the European Court of Justice although a ruling could be years away.
Whatever the next move, the Government will have to steer very carefully in any negotiations as we vie to maintain our low corporate tax strategy.
It will have to do this while maintaining a reputation for transparency and not losing its focus on the importance that indigenous business contributes to the economy.
Sunday Indo Business