€2bn corporate tax hike puts government on track for record tax
The government is on track for another record tax grab this year due to several large and unanticipated corporate tax payments from multinational life sciences companies.
The latest Treasury yields for October were also supported by a sharp rebound in VAT linked to the reopening of the economy and a recovery in consumer spending.
They show that the government has collected €50.9 billion in taxes so far this year, €3.8 billion or 8% more than expected and nearly 20% more than last year. same period last year.
This good performance is driven by corporate tax, which generated 9.5 billion euros over 10 months, or 2 billion euros more than the government’s initial target. Professional tax receipts for the month of October alone were almost a billion euros higher than the profile.
The Department of Finance 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.
“It is not expected that such a high level of revenue will be repeated in the years to come,” he said.
The dynamic figures come as Ireland signs the OECD-brokered tax deal, endorsed by G20 leaders over the weekend, which will ensure large companies pay a minimum tax rate of 15%, a move that effectively ends Ireland’s precious 12.5 per cent. rate.
“Corporation tax receipts in October were higher than expected, illustrating yet again the inherent unpredictability and volatility of this revenue stream,” Finance Minister Paschal Donohoe said.
“Despite the greater 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 the VAT has brought in the public treasury €12.6bn (€785m above profile), most since restrictions were lifted in May.
Income tax, meanwhile, generated 20.6 billion euros (484 million euros above profile), reflecting a 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. This amount was nearly 2.4 billion euros, or 3.5% less than expected, due to “underspending” in several departments.
“The spending underspend 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, was for spending by the Ministries of Education, Social Care, Health and Teaching Higher and Higher Education, Research, Innovation and Science. “This reflects the government’s continued focus on protecting the most vulnerable in society and prioritizing basic social services from the impacts of Covid-19,” he said.