The European Commission has said there are indicators that show Ireland's corporate tax rules are used in aggressive tax planning systems.
In its latest Country Report - part of the 2018 European semester budget and policy co-ordination exercise - the Commission said, "Some indicators suggest that Ireland's corporate tax rules are used in aggressive tax planning structures. As shown in a study, Ireland's high inward and outward FDI stock can only partly be explained by real economic activities taking place in Ireland.
"The high level of dividend payments and, in particular, charges for using intellectual property, suggest that the country's tax rules are used by companies that engage in aggressive tax planning," it continued.
"Exemptions from withholding taxes on dividend payments made by companies based in Ireland may lead to those payments escaping tax altogether, if they are also not subject to tax in the recipient jurisdiction. This may facilitate aggressive tax planning. Furthermore, the existence of some provisions in bilateral tax treaties between Ireland and some other countries may be used by companies to overrule the new tax residence rule put in place in Ireland in 2015".
The report is also critical of what it calls the low level of provisioning by banks against non performing loans.
It said, "The level of bank provisions against NPLs is among the lowest in the EU, and declining. The average coverage ratio of Irish banks was 32.6 % in June 2017, compared with the 45.8 % euro area average. While some provision releases are linked to debt resolution activities and domestic real estate price increases, it is important for them to remain at prudent levels."
It said that after years of debt reduction, Irish households could be approaching a turning point in credit demand. It notes that the stock of loans to households turned positive in 2017 - the first time this has been the case since 2009.
Last year lending growth was 3.2% year on year. Mortgage draw down was €7.3 billion last year - more than double the rate of draw downs in 2011-2013, but just a fraction of the €40 billion in mortgage lending made in 2006, the peak of the credit bubble.
Overall the Commission says that sustained strong economic growth here "provides ample momentum to further increase the resilience of the public and private sectors".
But it says infrastructure bottlenecks in planning, housing energy, water and broadband need to be addressed to ensure sustainable and regionally balanced growth.
