The Government is facing resistance from business to any phasing out of contentious Irish corporate tax rules before similar steps by other countries.

In light of a looming overhaul of global tax rules, the Department of Finance is examining whether there should be an early move to gradually wind down a controversial tax scheme known as the “double Irish”.

This mechanism enables global companies to reduce tax payments by exploiting differences between Irish law and that in other countries. The debate centres on whether the Government should signal tax changes in October’s budget before reforms in any other states.

High-level business sources say opposition is likely to be expressed in submissions to a Department of Finance consultation on corporate tax, which ends tomorrow week.

Profit-shifting

Danny McCoy, head of business lobby Ibec, said: “The case for Ireland unilaterally pursuing the elimination of the no-corporation tax situation is high-risk and certainly the case is unproven. It appears to me the majority of businesses would continue to favour Ireland acting in a multilateral action post the BEPS deliberations.”

The OECD is acting on the instructions of global leaders, among them US president Barack Obama, who are concerned multinational groups are deploying aggressive practices to avoid paying tax.

This has significant implications for the Government, given controversy in the US and EU over tax strategies deployed in Ireland by Apple and many others. The BEPS initiative will not conclude until late 2015, and only then would Group of 20 nations examine the case for a binding multilateral plan at global level.

The argument has been made in Dublin that an early signal of change here would be advantageous for reputational reasons and help maximise the phasing-out period.

The department had little to say about its deliberations: “We’re fully engaged in the BEPS process at OECD level and, as part of that process, we have a consultation ongoing.”

State aid investigation

But Minister for Finance Michael Noonan told an Oireachtas committee last month he would be surprised if he did not introduce corporate tax provisions in the next Finance Bill. He cited the OECD recommendations and consultations with the European Commission, which has embarked on a state-aid investigation into Apple’s tax affairs in Ireland.

On the possibility of unilateral Irish action, senior business figures in Dublin privately acknowledged a “very broad spectrum” and “very, very mixed views” among Irish-based multinationals. Some US firms are said to favour an early move but others are opposed.

Brian Cotter, public affairs director at the American Chamber of Commerce in Ireland, said: “We would expect. . . the most important thing would be that we continue to reinforce the certainty of the Irish taxation regime.”