What is the OECD proposing? The Paris-based think-tank has come up with a series of proposals to reform the international tax code. They are aimed at stopping multinational firms avoiding tax by shifting profits from one country to another.
Why now? The proposals come amid a public outcry over the low levels of tax being paid by big corporations such as Google, Apple and Starbucks. The US government is also concerned about "tax inversion" deals in which companies avoid the country's 35 per cent corporate tax rate by merging with foreign firms.
What is Beps? Base erosion and profit shifting (Beps) is an umbrella term used to describe the ways multinational firms exploit different tax codes to reduce their overall tax bill.
What is the 'double Irish'? A quirk in the Irish tax code allows firms based abroad to be registered as Irish companies. This loophole has been exploited by the likes of Apple and Google to route profits through Ireland and on to Irish-incorporated companies based tax havens in the Caribbean and elsewhere.
How is the OECD proposing to tackle the issues? The measures, agreed by 14 states, would make it more difficult for companies to transfer hard-to-value “intangibles”, such as intellectual property, to lower tax jurisdictions and then charge their other subsidiaries a licensing fee for their use. They also seek to make firms subject to detailed reporting on a country-by-country basis so authorities can calculate their tax bill.
Will they work? They are only proposals and it will take some time to get countries to put them into action. Nonetheless, most commentators agree the recommendations mark a shift to a new era of international tax regulation.
What is Ireland's involvement? Ireland has been at the centre of the storm over multinational tax avoidance because of the aggressive tax strategies deployed here by the likes of Apple and Google. Last year, US senators John McCain and Carl Levin said Ireland was a tax haven after it emerged Apple paid taxes of 2 per cent on its foreign earnings in 2012.
What is the Government's position? Minister for Finance Michael Noonan says the State's relatively low rate of corporation tax is the centrepiece of the State's inward investment policy and will be maintained. However, he is considering addressing some controversial aspects of the tax code, such as the "double Irish", in the budget.
Are the new proposals likely to affect inward investment here? This is difficult to tell. The American Chamber of Commerce Ireland, which represents US firms here, has warned that any unilateral phasing out of anomalies in the Irish tax system could put the State at a competitive disadvantage. That said, Pascal Saint-Amans, the chief architect of OECD's tax proposals, insists Ireland has nothing to fear as its competitive rate of corporation tax is not under threat.
