Irish corporate tax boom 'over' - finance minister

Ireland looks likely to collect less tax in 2023 than forecast in April after a second successive monthly fall in corporate tax receipts indicated that a recent boom is over, Finance Minister Michael McGrath said on Tuesday. Having more than doubled in the space of two years to make up 27% of the entire tax take in 2022, corporate tax receipts - mostly paid by Ireland's large hub of big multinational companies - were forecast to rise by another 7% this year.

Ireland looks likely to collect less tax in 2023 than forecast in April after a second successive monthly fall in corporate tax receipts indicated that a recent boom is over, Finance Minister Michael McGrath said on Tuesday.

Having more than doubled in the space of two years to make up 27% of the entire tax take in 2022, corporate tax receipts - mostly paid by Ireland's large hub of big multinational companies - were forecast to rise by another 7% this year. Instead they were up 4.4% for the first nine months of 2022 after falling 23% year-on-year in the third quarter, leaving the overall tax take 1.5% behind target a week before ministers deliver the budget for 2024.

"We have been sounding the warnings for quite some time that this could happen. We're still seeing growth year-on-year but the days of corporation tax receipts growing at a really high rate year in, year out we believe are over," Finance Minister Michael McGrath told a news conference. "It does act as a stark reminder that there are dangers here, that these receipts are inherently uncertain and volatile. We certainly can't rely on them for permanent measures, either, in expenditure and taxation."

McGrath said there would likely now be a "levelling off" in corporation tax growth in the coming years compared with the modest year-on-year growth most recently forecast out to 2026. He said the fall in the last two months was mainly due to the weaker external economic environment, impacting the exports and profitability of technology and pharmaceutical firms.

The finance ministry forecast in April that continued growth in the corporate tax take would contribute to Ireland's budget surplus increasing to 3.5% of modified gross national income by the end of 2023. McGrath said his department would update those figures next week, declining to say where the surplus would now finish. ($1 = 0.9555 euros)

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