The capital of the European Union, Dublin is one of the most prominent centres of business in the world.
In recent years, however, the capital has been under pressure to change its approach to managing its public finances.
The latest example of this is the latest bailout by the European Central Bank, which is being hailed as a “milestone” by some in the capital, but is likely to cause further problems for Dublin.
It is understood the Dublin City Council will continue to pay corporation tax in Ireland, while other businesses in the city will have to pay their full corporate tax in their home country.
However, the move is likely subject to the approval of Dublin City Hall.
In an effort to boost its economy, the council is set to introduce a corporation tax cap of 15 per cent on the salaries of all corporate executives, with an upper limit of 25 per cent.
Dublin City Council spokesman Michael O’Callaghan said: “The Dublin City Government is committed to working with all the businesses that we serve in order to grow our economy and meet our targets.”
He said the council was currently considering all options and would consider further options as the situation evolves.
Last week, Dublin City Minister for Economic Development and Innovation Paul Murphy warned that any corporation tax increase would only “seriously dent” the city’s competitiveness.
A similar situation was also faced in London, which recently introduced a corporation income tax of 20 per cent to address a rise in the value of the pound.
A spokeswoman for the European Commission said the capital was in a “critical period” for the economy.
She said:”The Dublin government has repeatedly expressed its concern about the growing level of public debt in the Irish economy.”
It is a difficult and complex situation and the Commission is keen to work closely with the Irish Government on a number of issues, including addressing the current level of private sector debt.
“This would benefit all of our citizens, including the private sector and the public sector, and would also benefit the Irish public finances in the long run.”
A spokeswoman from the Irish Business Council said the Irish corporation tax system was currently “on the right track” and that it had a clear tax code, which was well-managed and tax-efficient.
She added: “We look forward to the Dublin Council implementing the recommendations made by the OECD and its European Commission, and continuing to implement the Dublin corporation tax regime in a way that maximises the benefits for all businesses in Ireland.”