Ten firms pay nearly 40% of corporation tax, Revenue says

Report highlights Ireland’s reliance on a small number of multinational firms

Niall Cody of the Revenue Commissioners: the business tax base is “concentrated and volatile”.  Photograph: Aidan Crawley

Niall Cody of the Revenue Commissioners: the business tax base is “concentrated and volatile”. Photograph: Aidan Crawley

 

Just 10 firms paid nearly 40 per cent of Ireland’s corporation tax last year, Revenue has confirmed.

Corporation tax receipts have surged in the last two years, rising 57 per cent to €7.35 billion, a shift that has been linked to the global clampdown on multinational tax avoidance. Ireland’s reliance on so few firms makes the tax base here unpredictable and vulnerable to shocks.

Figures, published alongside the Revenue Commissioner’s annual report for 2016, show that more than 80 per cent of the corporation tax yield comes from a small number of foreign-owned multinationals.

Revenue chairman Niall Cody acknowledged the business tax base was “concentrated and volatile”.

However, he said the recent upsurge in receipts was broad-based and reflected increased profitability by companies internationally.

Mr Cody noted that UK corporation tax receipts had risen by 21 per cent to £56 billion in the past year.

The Revenue’s report revealed the importance of the multinational sector to the wider economy here. It showed that just over 2,000 foreign-owned multinationals, employing 336,000 people, generated €12.3 billion in employee wages in 2015. The remaining 36,000 Irish companies, which employ approximately 878,000 people, generated €18.8 billion in wages .

Launching the report, Mr Cody said he would not be commenting on the EU’s €13 billion Apple tax ruling or the Government’s decision to appeal as the matter was still subject to legal proceedings.

Tax opinions

He said, however, the Revenue had decided to undertake a review of previous tax opinions issued to companies prior to 2012 on foot of the Apple dispute.

When asked about Brexit, Mr Cody said the Revenue engages with the UK customs authorities on a range of issues. He said the challenge of Brexit was customs and what customs rules allow, and that Revenue was in the early stages of examining the options available.

On the issue of non-compliance, the Revenue revealed it had secured 17 criminal convictions for serious tax and duty evasion last year while a further 31 cases were before the courts.

It also said there were 108 cases under investigation with a view to criminal prosecution. The overall yield from Revenue audit and compliance interventions was €555.6 million.

He also said the Revenue’s effectiveness in responding to fraud and criminality in the fuel sector had been strengthened, noting that just one mobile laundry was detected in 2016 while local authorities are reporting a significant decline in so-called sludge dumping.

Mr Cody said tobacco smuggling still posed significant threats to the exchequer, with illegal cigarettes estimated to account for 10 per cent of the market. In 2016, the Revenue seized 44.6 million cigarettes worth €24.2 million.

An ongoing problem for the Revenue has been the loss of experienced staff amid an increase in work on international tax and compliance. Mr Cody said he estimated that more than 1,700 Revenue staff of nearly 6,000 would retire in the next five years.

“In 2016, we recruited 545 staff from open and interdepartmental competitions,” he said. The plan was to recruit an additional 500 this year, he added.