Corporation tax is now the Government’s third largest tax channel, accounting for nearly €11 billion or 19 per cent of all receipts last year, the Revenue Commissioners’ latest annual report shows.
However, the report highlighted that 77 per cent of business tax receipts came from foreign-owned enterprises or multinationals and 40 per cent from just 10 big firms.
Corporation tax receipts have surged in the last four years with the increase linked to the global clampdown on multinational tax avoidance and the onshoring of assets such as intellectual property (IP) here.
The State’s reliance on so few companies, however, makes the tax base highly unpredictable and vulnerable to shocks.
The Government has been repeatedly warned not to use the additional receipts for day-to-day spending.
Revenue chairman Niall Cody said he was publishing the agency's annual report against the backdrop of exceptional circumstances arising from the Covid-19 pandemic.
“The pandemic has presented and continues to present significant challenges for the economy, businesses and workers, as well as impacting key elements of Revenue’s role as a tax and customs administration,” he said.
As of June 25th, Revenue said more than 62,800 employers had registered for the Government’s Temporary Wage Subsidy Scheme (TWSS), which is administered by Revenue, with an estimated 405,000 employees being supported.
The cumulative value of payments made to employers under the scheme is almost €1.7 billion, it said.
Commenting on Revenue’s support for businesses during the crisis, Mr Cody said that “we have taken a range of actions to assist businesses experiencing cashflow and trading difficulties, including suspending all debt collection and the charging of interest on late payment for the VAT periods covering the first six months of 2020 and the February, March, April, May and June PAYE (employer) liabilities.
He said these deferred payments, which amount to €1.5 billion up to the end of May, have been a vital liquidity support to both SMEs and larger businesses impacted.
Under the debt warehouse arrangement, announced by the Government in May, the Revenue has also deferred VAT and PAYE (employer) liabilities while a business is unable to trade or is subject to restricted trading due to the Covid-19 related restrictions.
The Revenue’s report shows it collected total gross receipts of €84.2 billion including almost €16 billion in non-exchequer receipts collected on behalf of other Government departments and agencies.
Net exchequer receipts for last year totalled €58.3 billion, up by 6.7 per cent or €3.7 billion on 2018, with the largest tax receipts arising from income tax (39 per cent or €22.9 billion), VAT (26 per cent or €15.1 billion) and corporation tax (19 per cent or €10.9 billion).
The agency said it completed more than 566,000 compliance interventions, yielding €548 million in tax interest and penalties while settling 127 tax avoidance cases with a yield of €129 million in tax, interest and penalties.
Action against fiscal fraud and illegal smuggling resulted in the seizure of illegal drugs valued at over €23.5 million and illicit tobacco products valued at over €10.6 million, it said.
In relation to Brexit, it said it continued “extensive and detailed Brexit preparedness and contingency planning”, engaging across all relevant Government departments and agencies and with more than 100,000 businesses.
Mr Cody said: “Revenue continues to be strongly focused on supporting and helping businesses to be ready for the significant changes and impacts of the UK’s exit from the EU which will take full effect in just six months time.
“Businesses really need to make sure that they use the short time still available before the end of the year to be ready for the change,” he warned.