Corporation tax take in November up 27% on last year
Corporation taxes recovered strongly in the month of November, helping the Exchequer to deliver a surplus of €5.4 billion.
Just over €6 billion was collected in corporation tax, an increase of €1.3bn – or 27% – on last year.
For the past three months, corporation tax has come in lower than government forecasts.
But in November, a bumper haul of €6.3bn came in reversing that trend and putting the public finances back on track.
Minister for Finance Michael McGrath told RTÉ News this highlights the volatility in corporation tax and the need to save some of these windfall gains in new investment funds announced at the time of the Budget.
“The volatility in this revenue stream highlights the importance of ensuring that permanent fiscal commitments are not made on the basis of temporary receipts,” he said in a statement.
“Instead, the establishment of the two new long-term savings vehicles, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, will use these windfall corporation tax to help finance known future fiscal challenges, such as an ageing population, climate change and digital transition,” he added.
Today’s figures show the pace of increase in other sources of tax has slowed, reflecting signs of an overall slowdown in the economy.
Income tax in November was €4.6bn, up 5.7% on last year, while VAT was up €42 million or 1.4% to €3.1bn off the back of stalling retail sales.
Overall, tax receipts of €82bnwere collected in the year to the end of November. That is €4.5bn, or 5.8%, ahead of last year.
On a cumulative basis, corporation tax to the end of November was €22bn, up 4.2% on last year.
Income tax in the year to date was €30.3bn, up 7.3% while VAT at €20.1bn is up 8.6%.
Meanwhile, total gross voted expenditure to end-November was €82.4bn , up by 9.9% on last year and 1.7% ahead of profile.
The Department of Finance said this reflects the supports provided as part of the cost of living package in the budget, including funding for the three electricity credits to be provided to households.
“Today’s figures reflect Government’s significant year-on-year increase in expenditure on public services,” said Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe.
“This growing level of resources reflects the additional demand and complexity facing our public services particularly in the health and education sectors,” he added.
Commenting on today’s figures, Tom Woods, Head of Tax at KPMG said the Exchequer is back on track to collect corporation tax of €23.5bn for the year as projected by the Government in early October.
“The strong performance of today’s figures indicates that profitability in 2023 has held up in a reversal of the negative trends from August to October.
“This exceptional growth is a tribute to stable and attractive economic policies and should give scope to the Government to press ahead with the new Future Ireland fund in 2024,” he added.
Paschal Comerford, Tax Director at Grant Thornton Ireland described the corporation tax figures as “somewhat surprising” after several months of weak returns.
“These exceptional corporation tax receipts most likely reflect the strong performance of the technology sector, which this year has significantly outperformed the pharma sector, with the latter having enjoyed a boom during Covid,” he said.
“This is consistent with what we are seeing internationally, where to date we see no evidence of behavioural changes amongst large multinational groups based here, despite upcoming international tax law changes.
“If there is a pick-up in global economic activity next year, then it is possible that 2024 receipts may even exceed what now looks like being a stellar 2023,” he added.