Corporation tax receipts hit record €6.7bn in October

Coporation tax receipts hit a record €6.7 billion for the year in October, which was more than a €1 billion ahead of the Government’s official target, the latest exchequer returns show.

The unexpected windfall means the Government’s overall tax take for the year, which had been below profile for several months, is now nearly €600 million ahead of target.

The figures show receipts from the business tax totalled €1.6 billion in October alone, which was 96 per cent or €773 million ahead of what the Department of Finance had anticipated.

At €6.7 billion for the year, corporation tax revenue is now 24 per cent or €1.3 billion up in year-on-year terms and 19 per cent ahead of target for the year.

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Corporation tax receipts have more than doubled since 2015 and are on course to be close to €9 billion this year amid a massive transfer of multinational assets here in the wake of the clampdown on multinational tax avoidance and increased corporate profitability generally.

About 40 per cent of the revenue generated comes from just 10 firms, understood to include tech giants Apple, Microsoft, Dell, Google and Oracle.

The Government has been repeatedly warned not to use the current windfall to fund permanent spending measures given the increasingly uncertain economic outlook internationally.

The Department of Finance said the strong corporation tax receipts in October were due to the higher-than-profiled payments from large companies which was signalled to the department by Revenue earlier in the year and included in Budget 2019.

The latest exchequer numbers show the Government collected €42.1 billion in tax so far this year. This was €594 million (1.4 per cent) above profile for the year.

Income tax generated just under €16.3 billion, which was roughly on target for the year and over €1 billion up on last year, reflecting the strong level of employment growth in the economy.

VAT, which reflects conditions in the retail sector, came in marginally below target at €11.8 billion, but was significantly up on last year.

The one soft spot was excise duty, which came in €361 million or 7.6 per cent below profile at €4.8 billion. This was blamed on retailers stockpiling tobacco imports ahead of the introduction of plain packaging on cigarettes.

The figures pointed to an exchequer deficit of just under €2.7 billion for October, compared to a surplus of €326 million for the same period last year. When adjusted for the impact of the AIB share sale in 2017, the exchequer balance shows an underlying annual increase of €414 million.

On the spending side, total net voted expenditure amounted to €40 billion, up 9 per cent on last year. Health spending was just under €13 billion, which was €340 million ahead of profile.

“It is likely that for the year as a whole, deficits elsewhere will be mopped up by a large surplus of corporation tax receipts, with the figures now over €1 billion ahead of target,” said Peter Vale, tax partner with Grant Thornton.