Professor Frank Barry:

Intellectual property was much less important in 1997, although everybody now has all sorts of electronic gadgets and it has become much more important. How this situation suits the corporations is that, before 1997, royalty payments for intellectual property were taxed as soon as they were earned, no matter where they were made in the world. Since 1997, however, they are taxed only when they are repatriated to the US. The US multinationals earn this money in the Caribbean but they do not repatriate it, so this does not trigger immediate tax liability. It is like getting an interest-free loan from the American taxation authorities. That is how they benefit from this.

As I said, the Republicans in Congress realise this, which is why they are defending the use of the Caribbean tax havens. I paid attention to the Senate sub-committee and I did not particularly get a sense they were trying to hide the role of the Caribbean in all of this, but the Chairman might have read it differently. I believe everybody is aware of the role of the Caribbean.

Why Ireland gets mentioned and gets called a tax haven is simply, I think, that the American politicians do not want public recognition of the fact they are responsible for allowing their US corporations to avoid immediate US taxation. There may be good reasons for allowing their companies to exploit these rules, but they just do not want to recognise it. I guess it is populist politics at play, or that would be my understanding of it.

The Chairman's second question was why the EU was now looking into Ireland. I was talking to some people about this recently. First, it would be great if it clears us - if the Revenue sends over its Excel files or whatever, Brussels looks at them and everything is fine and above board. From talking with other people in the past couple of weeks, there is a sense that the European Commission has been so sidelined by the euro crisis that it is nowhere near as important as it used to be five years ago. It may be struggling to find a role for itself and it is being overshadowed by the OECD in this matter, so maybe it is saying: "We want a bit of publicity out of this." That is a sceptic's point of view but there may be validity to it.