The European Commission is to open a formal investigation into Apple's tax arrangements with Ireland.

An announcement is expected to be made by Competition Commissioner Joaquin Almunia tomorrow.

Last year, the Commission began an information gathering exercise into the tax arrangements for multinational companies in a number of countries, including Ireland.

It came after a US Senate committee accused Ireland of giving special tax treatment to Apple, which allowed it sidestep large tax payments around the world.

This claim has been strongly rejected by the Government, however, with the Department of Finance referring to the tax system here as open, transparent and statute-based.

EU state aid rules are designed to prevent unfair practices, although it is not clear that countries offering favourable tax terms to companies or industries would violate such rules.

When asked about an investigation by the European Commission Taoiseach Enda Kenny said that overall an international response is required.

He said Ireland had co-operated with the OECD and he said he hopes its report will provide an international solution.

He added that if the European Commission makes a comment, it is not to do with our corporate tax or any changes in the rate of our tax.

He said he believes our legislation is very strong and ethically implemented and we will defend that robustly.