Q&A Corporation Tax
Q Is Europe investigating Ireland's corporate tax rate?
No. The probe launched by European competition authorities has nothing to do with Ireland's official tax rate on company profits of 12.5pc.
Europe has no role in deciding what tax rate countries charge to business or individuals – not yet anyway. The probe is into the quirks that allow companies to pay less than the standard.
Q How can that happen?
There are a variety of schemes that let big business minimise the tax they pay.
The most controversial of those avoidance schemes is the so-called "Double Irish".
It is heavily used by American multinationals in particular, not least because they pay a very high rate of tax on profits at home.
To be clear, the "Double Irish" is legal – it's not a question of anyone using Irish law to engage in tax evasion.
But Ireland is being used by firms to avoid paying billions of dollars in corporation tax, using a quirk in our tax law.
That quirk allows a company based outside Ireland to be registered as an Irish company for residency but not tax purposes.
It means they have the full protection of the Irish legal system without necessarily having to pay tax here. The tax could fall due in a low tax country like the Cayman Islands.
Many people were shocked to learn earlier this year that the Irish-registered firm might even be tax resident nowhere. That really got up the nose of American politicians when they looked at the tax affairs of Apple.
Ireland also has generous laws on "transfer pricing", which allow a big company to move profits from one country to another.
Q Who benefits from these schemes?
Some of Ireland's biggest employers – the likes of Apple and Google – have been found to be using these highly efficient tax-avoidance or minimisation schemes.
They work especially well for companies where the real value of the product they produce is in its brand or intellectual property.
Arguably, the wider Irish economy gains because attractive tax schemes are part of what brings in multinationals. Thousands of people working in specialist accountancy and legal firms are also the big gainers.
Q Great, so who loses?
There is a strong argument that tax-avoidance schemes mean countries – including Ireland but especially the US – lose out because they carry the cost of providing the sound legal and economic framework that multinationals depend on without getting a fair share of those companies' profits.
The latest European probe suggests there could be a competition concern in all this.
In a nutshell, that could mean that some companies get an unfair advantage if there is some special tax deal available. The Government insists that all companies in Ireland are subject to the same rules, and if companies want to be based elsewhere, that is their own decision.