Brian Lenihan, Ireland’s finance minister, has vowed that the country will not change its 12.5% corporate tax rate in return for an international aid package.

Lenihan said yesterday (18 November): “I have always made it clear to all international organisations that it is a red line.”

Some EU member states, particularly France and Germany, are putting Dublin under pressure to raise its corporation tax  – one of the lowest in the eurozone – as a condition for receiving aid.

The low rate has encouraged multinational companies set up base in Ireland and there are fears that they could move away if the level was increased.

Formal discussions between the Irish government and representatives of the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission begin today (Friday).

Lenihan admitted to Ireland’s parliament that the government could accept an aid package for the country’s banks. But he added that if a contingency fund was available, it would not necessarily be used.

During talks yesterday officials looked at ways of cutting the number and size of Irish banks, according to a report in the Irish Times.

Discussions raised the possibility of offering guarantees to buyers, funded by the IMF and European stability fund loans, to cover potential losses.

Yesterday Patrick Honohan, the governor of the Central Bank of Ireland, said the discussions could lead to Dublin receiving a loan running into “tens of billions” of euros.

Brian Cowen, Ireland’s prime minister, distanced himself from the comments, saying they were “premature”.

The Irish government is to publish its four-year budget plan to make savings worth €15 billion early next week.

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