€ 2 billion corporate tax hike puts government on track for record tax levy
The government is on track for another record-breaking tax levy this year following several large and unexpected corporate tax payments from multinationals in the life sciences industry.
The latest October chess returns were also supported by a sharp rebound in VAT linked to the reopening of the economy and a pickup in consumer spending.
They show the government has collected € 50.9 billion in taxes so far this year, which is € 3.8 billion or 8% more than expected and almost 20% more than at the same time last year.
This good performance was driven by corporate tax, which generated 9.5 billion euros over 10 months, or 2 billion more than the government’s initial target. In October alone, corporate tax revenues were nearly a billion euros above profile.
The finance ministry said the outperformance was due to larger-than-expected payouts from the life sciences sector. It included the € 297 million settlement of the record € 1.64 billion tax bill imposed on pharmaceutical company Perrigo.
“Such a high level of revenue is not expected to happen again in the years to come,” he said.
The encouraging figures come as Ireland signs the OECD-brokered tax deal, endorsed by G20 leaders over the weekend, which will ensure large corporations pay a minimum tax rate of 15 percent , a move that effectively puts an end to Ireland’s 12.5 percent price tag. rate.
“Corporate tax revenues in October were higher than expected, once again illustrating the inherent unpredictability and volatility of this revenue stream,” said Finance Minister Paschal Donohoe.
“Despite the additional clarity that now exists with international tax reform, there is still a high level of uncertainty about its impact on Ireland,” he said.
“The best form of defense against any negative impact is to have strong and stable public finances,” Donohoe said.
Treasury figures show that VAT brought the Treasury 12.6 billion euros (785 million euros above profile), mainly since the restrictions were lifted in May.
Income tax, meanwhile, generated 20.6 billion euros (484 million euros above profile), reflecting the stronger-than-expected recovery in employment.
Over 12 rolling months, the Treasury recorded a deficit of 8 billion euros in October.
On the expenditure side, total expenditure at the end of October amounted to 67.5 billion euros. It was nearly 2.4 billion euros or 3.5% below the profile due to “underutilization” in several departments.
“The underutilization of the profile is the result of a number of factors, including the closure of construction sites earlier in the year,” the department said.
Public Expenditure Minister Michael McGrath said 82% of spending, or some 51.1 billion euros, was spent by the ministries of education, social protection, health and higher education and complementary, Research, Innovation and Science. “This reflects the government’s continued attention to protecting the most vulnerable in society and prioritizing basic social services against the impacts of Covid-19,” he said.