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The Financial Times reports today that the European Commission is investigating tax deals given to multinational corporations by the Irish government. The paper says it's part of a wider probe involving the Netherlands and Luxembourg. The government has repeatedly denied claims companies are offered special tax breaks in return for jobs and investment.

Ivan and Chris discussed the story on Breakfast this morning:

Ivan thinks “we should be utterly transparent, we should ‘fess up, and we should not continue to have this stigma of tax evasion country for very little benefit. I think 12.5% is a very competitive rate… but I believe we’d hold on to the jobs… The large multi-national corporations are abusing this. There is also the issue of fairness in society. People going to work this morning listening to this are paying tax at 54c in the Euro. I honestly believe that we can do without this.”

Defenders of the special tax rates for multinational corporations, on the other hand, strongly believe that adaptable rates are vital to keep many of these companies in the country. Even if they are not paying the full 12.5% rate, they are providing jobs to Irish people both directly and indirectly. Their continued presence helps build Ireland’s reputation on the international stage, and perhaps most importantly helps attract new companies to the country.

The fact that many major corporations have set up their EU hubs in Ireland suggests that the current model is effective on one level, although as Ivan stated the counter argument is that they are now abusing our allegedly generous and adaptable corporation tax policies.

Do you think Ireland should set its corporation to a 12% minimum in all cases, or even stick to a completely fixed rate? Do you believe ‘special’ tax rates for multinational corporations is ultimately beneficial, or has the system been abused? Vote in our poll and leave your comments below.