Record Corporate Tax Haul Brightens Irish Public Finances

Record Irish Corporate Tax Boosts Public Finances

By Padraic Halpin

DUBLIN (Reuters) – Ireland collected 9.4%, or 5.4 billion euros ($6 billion), more tax than expected in the first 11 months after it took in a record amount of corporate tax in November, traditionally the most buoyant period of the year.

Tax revenues proved extremely resilient during the worst of the COVID-19 pandemic in 2020 and have taken off this year despite the economy being in its third and longest lockdown for much of the first half.

The finance ministry took in 1.5 billion euros more that it had budgeted for last month alone, it said on Thursday.

It also collected 4 billion euros in corporate tax versus the 3.2 billion expected, putting Ireland on course for another record annual haul with corporate receipts making up more than one in every five euros of tax collected.

That also meant corporate receipts for November were greater than the annual corporate tax take ten years ago, when the state took in 3.8 billion euros.

While global corporate tax reforms are forecast to slow the recent rapid growth in a category dominated by foreign multinationals, they were 26% ahead of target during the first 11 months of the year at 13.6 billion euros.

Finance Minister Paschal Donohoe said the outturn reflected the very robust performance of the technology sector during the pandemic and that the receipts across the board were another positive indicator of the strength of Ireland’s economic recovery.

VAT receipts were 7.2% above forecast year to date at the end of November while income tax, the largest category, was 4.3% ahead of target after both also enjoyed a bumper month.

With spending 3.4% below forecast, the exchequer recorded a narrower deficit of 4.9 billion euros on a 12-month rolling basis.

The government forecast last month that it would run a 2021 budget deficit of 5.9% of modified gross national income, down from 8.8% last year.

While Ireland’s fiscal watchdog predicted this week that the deficit would be lower than that by year end, Donohoe told Reuters on Wednesday that the new Omicron COVID-19 variant made December too uncertain to call.

($1 = 0.8837 euros)

(Reporting by Padraic Halpin; Editing by Emelia Sithole-Matarise)