Record corporation tax receipts predicted for 2023 by Minister for Finance

Michael McGrath expects last year’s €22.6bn record to be surpassed, but cautioned about future fall-off following OECD moves

Corporation tax receipts for 2023 will surpass last year’s record of €22.6 billion, Minister for Finance Michael McGrath has said.

Mr McGrath described the continued contribution of corporation tax to the State’s coffers as “truly exceptional”.

The State took in €3.239 billion in corporation tax receipts in the first three months of the year, compared to €1.889 billion for the same period last year, a 70 per cent increase year on year.

Mr McGrath told The Irish Times this weekend he expects this pattern to be maintained during the course of 2023. The windfall from this tax heading funded much of the once-off cost-of-living packages unveiled by the Government on budget day last year, and in the spring of this year.


The prediction of a higher corporation tax take this year will be confirmed in the Stability Programme Update, which will be published on April 18th.

“Given the strong start to the year, I believe it is now likely that corporation tax receipts this year will exceed last year’s out-turn of €22.6 billion and we will confirm our estimate in the Stability Programme Update due to be published shortly,” Mr McGrath said.

However, he cautioned that over time, the receipts from corporation tax will begin to fall but said that it’s uncertain as to when that will happen.

The full implementation of the deal on base erosion and profit shifting in corporation tax, spearheaded by the Organisation for Economic Co-operation and Development (OECD), will have a negative impact on Irish receipts, he said.

“It’s not possible to accurately estimate the impact until the final design elements are agreed,” he added.

In a presentation on April 3rd, the Department of Finance’s chief economist John McCarthy alluded to the possibility of a timing issue with the €1.3 billon increase in corporation taxes. There are also increases in revenue from VAT and from income tax amounting to a further €1.5 billion. In all, tax revenues were up 14.6 per cent in the first quarter compared to the first three months of 2022.

At the briefing, Mr McCarthy said the introduction of the 15 per cent minimum tax rate for large companies was likely to boost Ireland’s tax revenue. However, he said the gain was likely to be offset by a loss in revenue from the reallocation of taxing rights in favour of bigger countries.

Under Pillar One of the OECD’s landmark reform deal, agreed in 2021, taxing rights will be reallocated to market jurisdictions while under Pillar Two a new effective minimum corporate tax rate of 15 per cent will be applied to companies with annual turnover of at least €750 million.

While the implementation of a new minimum corporate tax rate has largely been agreed, signatories to the deal are still haggling over the reallocation of profits from large multinationals such as US tech companies to countries where they made their sales. The move faces political opposition in the US.

At the briefing, Mr McCarthy said both pillars would have implications for Ireland’s tax base. “I don’t think we’ll be looking at massive increases in corporate tax” after the reforms are adopted, he said.

He admitted the department’s previous prediction that the State could lose up to €2 billion in revenue as a result of the reforms was now largely obsolete as it was formulated back in 2018.

Mr McCarthy said that “in the absence of any shock to the economy”, last year’s record total and the Government’s forecast for corporation tax this year (€22.7 billion) will almost certainly be exceeded.

He indicated that some of the recent surge may be linked to the exhaustion of capital allowances, which companies use to offset part of the their tax liability. It remains to be seen if “the intangible assets remain in Ireland once the capital allowances are exhausted”, he said.

Mr McGrath said the Government had to be careful due to the “windfall nature” of corporation tax receipts.

Corporation tax boost / Have we reached peak house prices?

Listen | 47:18

“This is why I will shortly bring forward proposals for a longer-term fund that will help to meet the demographic, age-related and other costs we know are coming our way in the years ahead,” he said.

Taoiseach Leo Varadkar said on Sunday that corporation tax was “the goose that lays the golden egg”.

Asked on RTÉ’s This Week if Ireland was over-reliant on corporation tax, he said: “A lot of those profits come to the Irish exchequer. So this is a good thing. You know, this is the goose that lays the golden egg and has been every year for a very long time now. So the most important thing we should do is make sure that we keep an environment in Ireland that is welcoming of investment.”

Harry McGee

Harry McGee

Harry McGee is a Political Correspondent with The Irish Times

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times