A real threat to the Republic's competitiveness appears to have been neutralised. An opinion from an advocate general at the European Court of Justice (ECJ) has stopped - for now - attempts to unpick the low corporation tax regime that is one of the main drivers of the inward investment that has fuelled the State's economic renaissance. Such opinions are followed by the ECJ in 80 per cent of cases.
The issue involved was narrow and related to the UK Inland Revenue's attempts to tax Irish subsidiaries of Cadbury Schweppes. But the consequences were potentially far wider, had the opinion gone against Cadbury and subsequently been followed by the court.
Such an outcome would have set a precedent for other European tax authorities to seek the difference between the tax paid here and the tax that would have been paid had the company in question been resident in the same state as its parent. The implications for the International Financial Services Centre in Dublin would have been dramatic as many companies are based there to take advantage of the tax differential.
Further down the line, if the case had gone against Cadbury, it would have bolstered the argument for tax harmonisation in Europe. This is favoured by some of the larger members, but vehemently opposed by the Republic for obvious reasons.
The case has served, however, to highlight a number of issues. Fundamentally it questions the wisdom of making low corporation tax, or more specifically tax competition, a central plank of economic policy. The more pertinent question, however, is for how much longer can we retain our competitive advantage in this area. The Cadbury case is unlikely to be the last assault by tax authorities in other EU states on our low tax rate, but there are now other, more pressing threats. Several of the new member states have adopted tax regimes as attractive, if not more so, than ours.
The Republic, with its historically low corporate tax structures and more than three decades of EU membership, has stolen a march on this front. Over this period a sophisticated infrastructure has developed linking the Government, development agencies, tax advisers and multinationals, which will take many years for our rivals to replicate. The product of this is a feedback loop resulting in subtle taxation policy changes, many of which go almost unnoticed, that maximise the value to foreign companies of our low corporate tax regime. The fruits of the changes engineered through this system are evident in the arrival of companies such as Google, which achieve massive global tax savings by having operations here.
The gains to the economy are less clearcut than heretofore, and quite where the tax competition "arms race" will take us in the long run is a question for another day. For the time being it is sufficient to welcome the news that the basic low tax rate that underpins this edifice is set to remain intact - for the moment at least.