As published on independent.ie, Thursday November 21, 2019.
It has been billed as the biggest change to international tax law in nearly a hundred years and one that could deal a death blow to Ireland's tax base and its success in attracting investment by foreign multinational companies.
Yet even as negotiations over global taxing rights to address inequalities between taxpayers and rich footloose companies move into their final stages, signs are that the impact globally, and perhaps on Ireland's corporate tax revenues may not be as severe as some have anticipated.
The aim of the changes is to halt profit-shifting companies and estimates of the amount of money at stake globally range as high as $640bn (579bn) over the long run.
A study by the European Commission said the tax gap between digital and traditional firms showed that the former faced an effective average tax rate of 8.5pc compared with 20.9pc for more traditional companies.
An analysis this week by the French government, which had threatened to impose unilateral taxes on tech companies in the absence of a global deal, showed that Paris would in fact raise very little from the new taxes.
If the impact on France, which had been looking to bolster its State coffers with new money, is small, then perhaps the flip-side is that the impact on Ireland might not be quite as large as some have anticipated.
Estimates of the potential losses to corporate tax revenues from business lobby group Ibec and the International Monetary Fund (IMF) range from €1bn a year to as high as €3bn a year.
That would effectively wipe out the €1.2bn a year in unexpected company tax payments between 2015-2018. Those have been used to fund an ambitious programme of rebuilding the State's infrastructure after years of austerity and soaked up repeated health overspends of €500m a year.
The threat to move to global taxation of digital giants like Facebook, Apple and Google, have rung alarm bells in the State's Exchequer. Up until Spring this year, Ireland had resolutely opposed measures that would reduce its ability to attract the investment that not only pays more than €10bn a year to the Exchequer but also creates hundreds of thousands of well-paid jobs.
The French Council of Economic Analysis study suggested that if Ireland did face a tax shortfall as result of changes to the international tax environment, it would be able to cover the gap by raising its 12.5pc corporate tax rate to 15pc.
"Ireland loses corporate tax revenues when it does not adjust its effective tax rate to 15pc while it gains corporate tax revenues when it adjusts. In this case, the negative impact on the taxable base is more than compensated by additional income generated by the increased effective tax rate," the French study said.
"It is worth noticing that the incentive to engage in profit-shifting reduces dramatically... when all tax havens adjust their effective tax rate to 15pc," it said.
Ireland denies that it is a tax haven.
A move to a higher corporate tax rate here also appears to be a non-starter as minister for finance Paschal Donohoe has repeatedly said the 12.5pc rate is not up for negotiation and is a fundamental of a small country's economic armoury in attracting investment and growing the economy.
While the threat of a hit to taxes remains, the analysis by the French government - and a rising tide of concern among campaigners who want to see greater taxing rights for developing countries - appears to indicate that any global agreement will be limited in scope and therefore in its impact on low-tax countries like Ireland and the Netherlands.
Charity Oxfam said its submission to the discussions over the tax architecture that are being coordinated by the Paris-based Organisation for Economic Cooperation and Development (OECD) that for being a once-in-a-lifetime opportunity to address the aggressive tax-shifting issue, very little was in fact being achieved.
"Oxfam considers that these negotiations are not aiming anymore at a fundamental overhaul of the international corporate tax framework to fit the economic reality of the 21st century," the charity said in its submission to the OECD published this month.
"Instead, the OECD is set to develop new rules likely to introduce new complexities and grey zones in addition to an already very complex system, that will, however, not achieve the overall aim of ending corporate profit-shifting and tax competition," it wrote.
The critical comments from Oxfam and other charities of the process were far outnumbered by industry, accountancy firms and other lobby groups seeking to preserve something close the status quo.
"It feels like the OECD stopped halfway through to compromise between countries willing to make the system fundamentally change and countries wanting to stay as close as possible to the current system to protect their interests," it said.
"The proposed rules will only redistribute a limited amount of taxing rights, for a limited number of activities and businesses."
While those comments reflect the disappointment of campaigners for what they see is more tax equity, they will come as a reassurance to the Department of Finance, the Exchequer and to the multinational companies who pay 8 in every 10 euros in corporation taxes in Ireland.
To put it bluntly, little change can be expected.
That is good news for Ireland's tax base. It means that the State will not wake up one morning to find a huge gap in its finances and be forced into cuts to much-needed investment in transport, hospitals, broadband and other infrastructure projects that have traditionally been axed when budgets are tight.
If you look at the multinationals themselves, there a few signs that they are changing their investment plans to take account of a tax shock that would render their business models unprofitable.
Google, for example, is in talks to increase its office space at the Sorting Office block to 202,000sq ft, according to media reports - a move that would enable it to add 2,000 employees to its 8,000 staff already based in Dublin.
The Department of Finance is conducting its own assessment of the potential impact of any tax changes on revenues and no details are yet available.
"Ireland is actively involved in the ongoing work at the OECD to reach a global consensus on addressing the tax challenges of digitalization," the Department said in a statement in response to an inquiry from the Irish Independent.
"We will continue to constructively engage in the process in order to find a globally sustainable agreement which will bring stability and certainty to the international tax system," it added.
There is precedent for alarm bells to ring over whether Ireland's low tax, foreign direct investment model would stutter.
As recently as 2017, the US's Tax Cuts and Jobs Act (TCJA) aimed to claw back for the United States revenues from multinational companies among which 60 Fortune 500 companies paid no taxes on a total of $79bn in profits.
Far from a threat, the TCJA turned out to be a boon for Ireland.
While it is too early to say that any radical proposals could be agreed - and it is certainly not the time to pop the champagne corks - a limited set of global tax measures that dealt with the issue and provided reassurance for companies that there would be no future tax raids could make Ireland a more attractive proposition for investment.