Tax surge from multinationals ‘not a one-off’
Some 80 per cent of increase this year attributable to multinational companies
About 80% of the increase in corporation tax payments this year is understood to be attributable to multinationals. Photograph: The Irish Times
The Revenue Commissioners told the Government a surge in corporation tax payments recorded in October’s exchequer returns was the result of strong trading conditions rather than one-off factors.
The Government had asked the tax authority for an explanation of an €800 million overperformance in corporation tax receipts last month.
The Government is anticipating another €2 billion in corporation tax payments by the end of 2015 to bring the overall return close to the €6.7 billion collected in 2006, the year before the financial crisis began.
About 80 per cent of the increase this year is understood to be attributable to multinationals.
Revenue data for October is believed to attribute €350 million of the advance to “unexpected” payments; €200 million to “early” payments; and another €200 million to delayed rebates and repayments.
There is speculation in financial circles in Dublin that the increase in corporation tax payments follows moves by a large US multinational to book certain profits in its Irish division that were previously booked offshore.
The Department of Finance declined to comment on the affairs of any taxpaying company and the business itself did not respond to a query.
Exchequer returns for October show Revenue collected €35.05 billion in tax in the first 10 months of the year, €3.08 billion more than in the same period last year and 7.6 per cent above target.
Such figures put the Government on course to exceed fiscal targets set out in Budget 2016, strengthening the public finances ahead of the election.
The budget was predicated on a year-end deficit of 2.1 per cent of gross domestic product for 2015 but a Government source said a year-end deficit below 2 per cent was now forecast. Although the budget foresees a 1.2 per cent deficit in 2016, the source suggested a deficit below 1 per cent would be in play if current trends continued.
OverperformanceThe State received €4.75 billion in corporate taxes for January-October, €2.02 billion above target. “The overperformance in the year to date is broad-based and primarily relates to improved trading and some timing factors,” the Department of Finance said.
The exchequer deficit was €2.18 billion in October, down from €8.5 billion in 2014. Income tax and VAT receipts were behind target in October but well ahead for the year to date. Overall expenditure is lower than forecast, largely on the back of lower debt costs. However, the overrun in the health service has already reached €422 million and the Department of Finance said such spending “is expected to continue running ahead of profile until the end of the year”.
The figures came as the unemployment rate dropped to 9.3 per cent in October from 9.4 per cent in September.
The exchequer figures show income tax receipts reached €13.86 billion between January and October, up €732 million on 2014.