Dublin: 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.
This pattern is expected 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.
“It is now likely that corporation tax receipts this year will exceed last year’s out-turn of €22.6 billion”, Mr McGrath said.
However, 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.
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.
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.