Dr. Aidan Regan:

It is turned off.

The second, and perhaps more controversial, dimension of the CCCTB is how to agree to divide up those profits and how to agree what is taxable income in each member state, based on assets, labour and sales. This committee knows, and analysis by ESRI has shown, that Ireland would lose out on that basis given that a lot of multinationals transfer profits from their sales of products in other EU countries back to Ireland, even though the sales and activity do not take place here.

The second big change with the CCCTB that the Commission proposes, and which the Franco-German strategic alliance favours, is that it would be mandatory for all firms with revenues above €750 million. There will be an additional research and development incentive scheme for small and medium-sized enterprises to sign up to. The overarching context of the CCCTB is that it is explicitly framed to tackle corporate tax avoidance. Previously, it was explicitly framed as a mechanism to enhance a single market and economic activity. This time there is a clear strategy to the effect that this is fundamentally about putting an end to corporate tax avoidance within the EU. The Commission has launched a concerted campaign, particularly aimed at European Union citizens, with videos on YouTube as part of its campaign to gather support for this. It is within EU citizens' interests for those who avoid paying taxes to pay their taxes and that activity is taxed where it takes place.

Where does this leave Ireland? Brexit will accelerate the drive to harmonise corporate income taxes. The probability of this being successful has increased significantly, not least because of a change in voting at the European Council. With Britain gone from the Council, a large number of the votes have been removed. To pass a common consolidated corporate tax proposal would require unanimity.

However, it is likely that Germany and France will seek to build consensus on this proposal and that they will try to do so through a side-payment system to the country which is most vocal in the absence of Britain, which, of course, is Ireland. What is Ireland's position? What is the Danish position and the Dutch position, given that these countries represent about 2% to 3% of the European Union's population? In voting terms and in real terms, they are not a large bloc. In a sense, this is the fundamental question facing Irish society. Ireland is already in the spotlight in Brussels, Frankfurt and Paris for facilitating global corporate tax avoidance, not least in the Apple case. Significantly, it represents a small portion of the overall population of the European Union. Hence, a core political economy question for Ireland is whether it is in Irish interests to veto such a strategic policy which is fundamentally aimed at building the problem solving capacity of the European Union to avoid the potential side effects of a country in the north west of its region turning itself into a low tax regulatory environment. In a sense, the future of the Eurozone is a Franco-German, not an Anglo-American, growth model. This poses major questions for the State.