Competition authorities in Europe are poised to clampdown on the ‘double Irish’ tax loophole as they step up the pressure on Dublin ahead of Ireland's Budget next week.
Brussels has warned Ireland to close down the scheme, which allows for tax avoidance, or face a wide-scale European investigation.
The system, used by US tech and pharmaceuticals firms including Google, Facebook, Microsoft and Abbott Laboratories, is highly controversial and involves registering several companies in different nations to shift profits to low or no tax jurisdictions.
Ireland’s finance minister Michael Noonan is facing a full-scale investigation over the tactic by European officials if it is not addressed in his Budget on Tuesday, the Financial Times reported.
Ireland’s low 12.5% corporation tax rate has attracted a host of US multinationals operating in Europe.
The move is the latest in a series of attempts by the European Commission to clampdown on so-called ‘sweetheart deals’ whereby countries lure large multinationals with the promise of low taxation.
The commission is reportedly interested in whether countries are offering deals to selected companies tantamount to state aid.
Incoming European competition commissioner Margrethe Vestager has vowed to continue the work of outgoing predecessor Joaquin Almunia and prioritise the study of various tax schemes.
