Changes to the Irish corporate tax regime are being seen as a first mover in reform by MEPs.

Fine Gael MEP for Dublin Brian Hayes was speaking in the European Parliament, ahead of a debate on tax avoidance schemes.

It follows allegations that Luxembourg facilitated tax avoidance schemes for large multi-national companies - by allowing them to set up new subsidiaries with few employees, or often none at all, in that country.

Those new companies were then used to send loans from one foreign subsidiary to another in a scheme which is legal.

Mr Hayes says that rather than probing the tax affairs of smaller EU members, larger countries such as Germany and the UK should question their own tax schemes.