“Ireland Records Record €6.3bn in November Corporation Tax Collection Amid Concerns of Windfall Slowdown”
Ireland’s tax authorities have reported a record-breaking collection of €6.3 billion (£5.4 billion) in corporation tax for the month of November. This follows three consecutive months of weakening performance, raising initial concerns about the sustainability of Ireland’s corporate tax windfall. In response to this surge in revenue, the Irish government is establishing a sovereign wealth fund.
The country’s advantageous tax reforms have attracted major corporations, prompting them to pay a significant portion of their global taxes in Ireland. Finance Minister Michael McGrath emphasised the need to contextualise the strong November performance. While corporation tax is currently 4% ahead of 2022, McGrath cautioned that the era of persistent over-performances is likely coming to an end. He highlighted the importance of avoiding permanent fiscal commitments based on temporary receipts, acknowledging the volatility inherent in this revenue stream.
During the mid-2010s, prominent companies, including Apple, strategically reorganised their affairs to increase tax payments in Ireland, aligning with global pressure for transparency and fair tax practices. Ireland, with its low-tax jurisdiction and substantial operational presence of major corporations, became a focal point for increased tax contributions. Last year, Ireland amassed €22.6 billion (£20 billion) in corporation tax, marking a remarkable 182% surge from the €8 billion (£7.08 billion) recorded just five years prior.
This year’s collection, reaching €22 billion up to November, is expected to surpass the previous year’s figure. Paschal Comerford, tax director at Grant Thornton Ireland, noted that November’s performance exceeded expectations, attributing it to the robust performance of the technology sector compared to the pharmaceutical sector, which experienced a surge during the COVID-19 pandemic.
Comerford also highlighted that there are no apparent behavioural changes among large multinational groups in response to the global minimum tax rate, indicating a continued resilience in Ireland’s corporate tax landscape. The upcoming increase in the headline tax rate from 12.5% to 15% for the largest firms in Ireland has not yet triggered noticeable adjustments in their tax strategies.
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