Updated 10.55pm

IRISH COMPANY TAX laws could be set for a huge overhaul after the OECD outlined a string of changes to stop companies shuffling their money into overseas tax havens.

The Paris-based organisation today recommended measures to reduce the mostly-legal tax-avoidance tactics that companies – particularly those in digital industries – were relying on to maximise profits.

It released details for seven elements of an “action plan” to cut down on tax evasion, including a guideline set of tax rules for all countries to use to stop companies exploiting loopholes between different regimes.

One of the loopholes, known as the “Double Irish” arrangement, is a legal tax-avoidance scheme most commonly associated with Google and its local operations.

• EXPLAINER: ‘Double Irish’ tax loophole in the firing line

Don’t fence the digital economy in

The OECD also included plans for dealing with the “tax challenges of the digital economy”, where the sale of “intangibles” – like software or digital media – made it easy for tech giants to shift their profits to wherever they would be liable for the least tax.

But the organisation said there was no point trying to “ring-fence” the sector with special rules as it was quickly becoming the globe’s primary economy.

Instead the organisation recommended introducing rules that would make companies pay tax in any countries they carried out their business or were involved in “value creation”.

Other elements of the plan included:

• Improving transparency on transfer pricing. This is money paid by one part of a large company to another and is often used to sidestep tax rules
• Bring countries’ tax regulations into line to prevent companies abusing tax treaties between different jurisdictions
• Countering “harmful” tax practices like countries operating low- or non-existent corporate tax systems

Today’s release is due to be followed by a second report next year to the G20, the forum for governments from 20 major economies including the EU, and members will then talk about how some or all of the plans will be put into place.

What does all this mean for Ireland?

The OECD’s recommendations would require international agreement to put into place, although tax is one of the key issues on the table when finance ministers meet at the G20 summit in Australia this weekend.

Minister for Finance Michael Noonan today said he welcomed the report and Ireland particularly agreed that digital businesses should not be “ring fenced” from the wider economy.

“Significant progress has also been made in the areas of coherence, substance and transparency and while further work is required in some of these areas, the reports are a further step towards multilateral co-operation on countering base erosion and profit shifting by multinationals,” he said.

In a good place, but don’t go it alone

Grant Thornton tax partner Peter Vale said it looked like big changes to the global tax landscape were inevitable and Ireland was in a good spot to capitalise on any new rules.

“(Ireland’s) combination of a low corporate tax rate, solid infrastructure and supply of a skilled workforce puts us in a strong and arguably unique position to benefit from the expected shifting of the tax goalposts,” he said.

But he warned against the government making any unilateral changes to Irish tax regimes as there was a risk the country would become less competitive in the global marketplace.

First published 2.59pm

READ: EU probe into Ireland tax deals with multinationals

READ: Enda Kenny: No, I’m not worried about the investigation into Apple’s Irish tax deal