A new paper published by Ireland’s Department of Finance reveals that corporation tax revenues have experienced a significant increase in recent years, reaching EUR10.4bn in 2018.
According to the paper – published on November 15 – receipts have grown by close to 20 percent on average per annum since 2014. As a result, the share of the Exchequer tax-take accounted for by corporation tax reached an historic high of 19 percent last year, it states.
The paper takes a detailed look at corporation tax developments, from both a micro and a macro-economic perspective with several important findings arising from a detailed modelling study. It highlights the marked rise in corporation tax receipts and corporate profitability since 2014.
The paper states that corporation tax receipts are concentrated in a number of key multinational dominated sectors, specifically pharmaceuticals, technology, and finance.
The paper finds that a select number of US variables have important explanatory power when it comes to modelling corporation tax receipts.
Welcoming the paper, Minister for Finance, Paschal Donohoe, said: “This paper acts as another reminder of the heightened growth in corporation tax receipts in recent years, some of which exceeded even departmental projections. Much of this relates to increased corporate profitability.”
The Minister added: “As such, we must be cautious not to become too reliant on this tax head, especially in light of the changes taking place in the wider global economy. Ensuring the resilience of the public finance, through the building up of financial buffers in the form of enhanced budgetary surpluses, is so important as this will act as a support mechanism for the economy and society in the years ahead.”Read the full paper here.