IRELAND'S corporate tax regime is coming under renewed scrutiny as governments around the world question how some of the biggest companies on the planet are using this country to avoid paying tax at home.
Within the last week it has emerged that Apple and even Mitt Romney's Bain Capital private equity firm have avoided hundreds of millions of dollars in tax by setting up in Ireland, while executives from Starbucks will appear before Britain's equivalent of the Oireachtas Public Accounts Committee next week to explain how it has paid only £8.5m (€10.6m) in tax on £3bn of UK sales in the past decade.
In the US both President Barack Obama and Mr Romney have highlighted firms that avoid tax overseas, while the influential Senate Permanent Sub-Committee on Investigations has opened a probe into technology companies' use of Ireland as a corporate base, describing this country as a "tax haven".
Yesterday, UK chancellor George Osborne said he was working with Germany to deal with the issue of multinational tax avoidance. The chancellor is expected to raise the issue at the next G20 meeting, with a view to bringing in rules for countries that are part of the Organisation for Economic Co-operation and Development aimed at forbidding the practice.
The Government, however, defended its tax regime. A spokesman for the Department of Enterprise said the 12.5pc corporation tax was essential for creating jobs here.
"The Government has repeatedly made clear its absolute determination to retain the 12.5pc rate of corporation tax.
"It is also important to point out that, in contrast to most other countries, Ireland has few exceptions and loopholes in our corporation tax system, meaning that our effective tax rate is very similar to our headline tax rate. One recent report has indicated that the effective rate is 11.9pc," he added.
The government has insisted at every turn that any change to the corporation tax rate was off the table and earlier in the year it appeared to have seen off demands from Europe to set up a Common Consolidated Corporate Tax Base (CCCTB), which would had been pushed by former French president Nicolas Sarkozy in particular.
Last month, however, 11 European states agreed to a transaction tax on financial trading. The use of enhanced co-operation for tax purposes has opened the way for the EU to use the same method for other taxes such as a CCCTB.
When the transaction tax, which Ireland has opted out of, was agreed, finance minister Michael Noonan dismissed concerns that it could be used to force a CCCTB through at Ireland's expense.