THE European Commission is set to drop its probe into Apple's tax arrangements here as it doesn't have a strong case, Finance Minister Michael Noonan has claimed.
It would be the first major breakthrough in restoring Ireland's international reputation, which has been battered by repeated accusations that the country offered sweetheart tax deals to major companies.
The controversy has cast a long shadow over the 160,000 jobs at multinational companies here, including Apple, which employs more than 5,000.
In June, Brussels accused Ireland of tax arrangements with Apple that gave an advantage amounting to state aid, and went against international guidelines.
But last night Michael Noonan said the Government will easily win the case, adding that Apple had paid everything "in accordance with law in Ireland".
The Apple probe dragged Ireland to the centre of the global controversy over ultra-low taxes paid by some big corporations.
If Europe drops the Apple probe, it will be a huge fillip to Ireland which has already taken action to close tax loopholes including the 'Double Irish'.
The fight to restore our reputation abroad is seen as crucial in maintaining Ireland's long-term attraction for foreign direct investment which brings thousands of jobs each year.
Speaking in Brussels, Mr Noonan said that he was now confident that the European case would go nowhere.
"It's more likely that that investigation will be dropped than there would be further investigations," he said. "My legal advice is that the Irish authorities will win the case quite easily and that there isn't a very strong case by the Commission. I'm speculating here, but it is the legal advice I have."
The investigation into Apple came after powerful US Senator Carl Lavin claimed that Apple boosted its profits using a "sweetheart" tax deal with Ireland - secured by threatening to cut jobs here.
The European Commission published a 21-page technical document last month setting out the case for its formal investigation into the State's tax arrangements with the firm.
There had been speculation that even more companies based here could be dragged into the probe. But the Government has insisted that it has no case to answer, and Apple has said that it receives no selective treatment from Ireland.
The Commission inquiry relates to the Irish branches of two Apple entities - Apple Sales International (ASI) and Apple Operations Europe. It focuses on two so-called tax rulings offered to the company by Ireland in 1991 and 2007, clarifying how the company's corporate tax rate would be calculated.
The Commission argues that Ireland's tax dealings with Apple, through the two rulings, broke the "arm's length principle" espoused by the Organisation for Economic Cooperation and Development (OECD).
This was created to deal with transfer pricing, which involves shifting of profits to low-tax jurisdictions to legally avoid taxes.
Brussels said that the 1991 ruling appeared to be "reverse engineered" to ensure a specific taxable income for Apple.
It also said that elements of the ruling were "motivated by employment considerations".
Apple, along with other multinationals, has found its arrangements scrutinized in recent years as corporate tax avoidance rose to the top of the agenda in the US and Europe.
This week Luxembourg was in the spotlight over deals its own tax authorities agreed with international companies.