The Government’s financial position has been boosted by what Minister for Finance Paschal Donohoe described as “a sharp increase” in corporate tax in June.
Exchequer returns for the first six months of the year show the business tax generated €7.4 billion last month, which was €1.5 billion or 25 per cent up on the same month last year.
June is the second most important month of the year for corporate tax - behind November - as it reflects payments from companies with financial years ending in December, which include Google, Meta, Microsoft and Intel, all of which have big operations here.
After a fall-off in receipts in May, there had been concern that US trade policy uncertainty might be affecting the profitability of these companies.
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But the latest figures, published by the Department of Finance, appeared to dispel those concerns with corporate tax receipts - on a cumulative six-month basis - up 7.4 per cent on last year at €13.1 billion and ahead of the department’s own forecasts.
Nonetheless Mr Donohoe warned the month-to-month changes highlighted the volatility of corporation tax.
“Corporation tax receipts in June have seen a sharp increase, which follows a sharp decline last month,” he said.
“This serves as a reminder of the extreme volatility in this revenue stream, and of its inherent unsuitability as a basis for permanent spending commitments.
“That is why we have established the Future Ireland Fund (FIF) and the Infrastructure, Climate and Nature Fund (ICNF) to set aside some of this potentially temporary revenue to help further protect us in the future,” he said.
“Last month, Government transferred some €3 billion into the two funds, and when the remaining transfers are made towards the end of this year, there will be around €16 billion in the FIF and ICNF."
The latest exchequer figures showed overall tax receipts were €49.5 billion in the first six months of the year, up 4.5 per cent on the first half of last year.
When once-off tax revenues of €1.7 billion arising from the European court ruling against Apple are excluded, the department said “underlying” tax revenues stood at €47.7 billion, which was a 6.7 per cent up on last year.
On a cumulative six-month basis, income tax receipts of €17.4 billion were 4.3 per cent ahead of last year, reflecting the ongoing strength of the labour market with headline unemployment remaining at a low of 4 per cent.
June was a non-VAT-due month and therefore monthly receipts were “relatively modest”, the department said.
Cumulative receipts from the transactions tax for the six-month period came to €11.6 billion, up by almost 6 per cent on last year’s total at this stage.
Total expenditure for the first half of the year amounted to €50.9 billion, up by 8.2 per cent on 2024 and ahead of the department’s profile by 0.7 per cent.
The Irish Fiscal Advisory Council, the Government budgetary watchdog, is warning that overruns in day-to-day public spending are likely to top €2 billion this year.
The department noted that year-on-year capital spending levels have increased substantially, with capital spending up 22.5 per cent overall.
Minister for Public Expenditure Jack Chambers said: “Today’s figures show a significant increase in capital expenditure, which underscores Government commitment to investing in the infrastructure our community needs and which is critical to enhancing our economic competitiveness.”
At a headline level, an exchequer surplus of €4.5 billion was recorded in the first half of the year.
