Government nets record €3.1bn in corporation tax in November
Department says windfall driven by number of big payments from multinationals
Minister for Finance Paschal Donohoe: The windfall was driven by a number of big payments from multinationals in the tech and pharma sectors, the Department of Finance confirmed.
The Government took in a record €3.1 billion in corporation tax in one month in November, nearly 30 per cent more than expected.
The windfall was driven by a number of big payments from multinationals in the tech and pharma sectors, the Department of Finance confirmed.
“November is the largest corporation tax collection month of the year and receipts were once again very strong, reflecting, in part, higher levels of corporate profitability in the economy,” a department spokesman said.
Exchequer returns for the first 11 months of the year show corporation tax has generated more than €10 billion so far this year and is on course to hit a record €11 billion for 2019 as a whole.
Receipts from the business tax have more than doubled since 2014 amid a massive transfer of assets here in the wake of a clampdown on multinational tax avoidance.
However, the Government has been warned not to use the excess revenue for day-to-day spending because of the highly concentrated nature of the tax base. About 50 per cent of receipts come from a just handful of companies, thought to include Apple, Microsoft, Dell, Google and Oracle.
The Government was warned just last week by the Irish Fiscal Advisory Council that as much as €6 billion of its corporation tax windfall may be temporary, leaving the public finances extremely exposed to a potential reversal.
The budgetary watchdog also noted that receipts form the business tax now accounted for one in every five euro of tax collected by the Government.
Minister for Finance Paschal Donohoe said that higher-than-expected corporate tax income seen in recent years “will not last forever” and such receipts were expected to decline from 2021 after a further likely increase next year.
“We cannot ignore the clear and present danger of a fall-off in corporation tax receipts,” he said.
Speaking at an event hosted by Institute of International and European Affairs in Dublin, the Minister highlighted the need to run budgetary surpluses over the medium term in order to address the vulnerabilities associated with the rising share of corporation tax receipts.
He outlined several external factors that threaten the Irish economy, including forthcoming changes to global corporate taxation policy.
“As a previous minister for finance once said, ‘it is difficult to run a surplus in a democracy’,” Mr Donohoe said, referring to comments made by boom-time minister Charlie McCreevy to the Oireachtas banking inquiry in 2015. “But let me say that surplus is not a dirty word. Running fiscal surpluses over the economic cycle is an effective response to looming threats,” he said.
The latest exchequer numbers show the Government’s overall tax take for the year stood at just under €55 billion, which was €1.4 billion or 2.7 per cent more than expected.
Income tax, the Government’s largest tax category, generated just under €21 billion, which was €175 million above profile but nearly €1.5 billion or 8.6 per cent up on last year, reflecting the strong level of employment growth in the economy.
VAT, which reflects conditions in the retail sector and consumer spending generally, came in marginally below target at €14.8 billion for year, but was still up in year on year terms.
The figures pointed to an exchequer surplus of €3.35 billion for November, compared to a surplus of just under €2 billion for the same period last year.