Full-year corporate tax receipts eclipsed €10 billion for the first time in 2018.
That milestone triggered a spate of warnings about our creeping reliance on this source of tax revenue and how these large payments – from just a handful of companies – had become divorced from the underlying performance of the economy.
Seven years on and we’ve just collected €10 billion in a single month. The boom has got boomier, the concentration more concentrated.
And it’s not likely to end any time soon. The Department of Finance is predicting the pot will expand to €34 billion next year as additional receipts from the new 15 per cent minimum tax rate applying to big multinationals flow in. Other factors like the ending of generous capital allowances could also play out in Ireland’s favour.
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While much of the narrative centres on the surge in pharma exports to the US earlier this year, Grant Thornton’s Peter Vale suggests this week’s record-breaking tally was more likely to stem from the other side of Ireland’s multinational coin, big tech.
“While no split is provided by the Department, the November figures are likely driven by the technology sector in particular,” he says. “2025 returns look set to finish the year close to triple the 2019 returns, which is an incredible statistic.”
Apple’s main Irish-registered entity was responsible for €8.2 billion of the €28 billion collected last year. This was separate from the €13 billion that flowed in courtesy of the Apple tax case.
Either way, the largesse is allowing the Government simultaneously run large budgetary surpluses, pay down debt and save resources in two newly established rainy day funds, objectives that would require trade-offs in normal times.
Ireland’s exposure to Trump’s protectionist pivot was flagged as a major risk to the economy and it still is. But the two pillars of Ireland’s export economy and the two drivers of our windfall taxes – pharma and big tech – have so far remained outside Trump’s tariff dragnet, insulating the economy from much of the current global volatility.
In a world of spiralling national debt and runaway budget deficits, Ireland is a statistical outlier.
Apart from the obvious worry that these potentially transitory taxes could retreat as quickly as they advanced, the windfall has allowed the Government avoid the hard task of reforming the State’s tax base, which has now become heavily reliant on basically three tax streams.
The “fiscal vulnerabilities” report, also published on Wednesday by the Department of Finance, highlighted what it described as “the fiscal blind-spots that could jeopardise the sustainability of the public finances”.
The report highlighted that the top 10 per cent of earners here generated 40 per cent of income tax receipts and 60 per cent of USC (universal social charge) contributions last year while one third of income recipients paid no income tax or USC.
That’s not sustainable.
