There is a “nervousness” in the Department of Finance that the bonanza of corporation tax receipts will not last, Colm McCarthy has claimed.
Minister for Finance Michael McGrath expects last year’s record €22.6bn in corporation tax receipts will be broken in 2023 but economists have cautioned that it could prove to be a volatile source of revenue.
“It’s a really big slice of the tax take,” Mr McCarthy said.
“There is nervousness that it might not be durable, it might not be there to be relied upon long-term.”
At 12.5%, corporation tax in Ireland is significantly lower than most the EU average and over the years the Government has used it as a unique selling point to encourage international investment.
“It [corporation tax receipts] are concentrated in a small number of firms and some of them are paying a lot of corporate tax here,” Mr McCarthy said.
“Not because they have enormous operations here - although some of them do have significant businesses here - but [because] they’re able to route corporate profits from other places around the world through Ireland, pay their tax here and avoid paying tax elsewhere.”
Following an agreement with the OECD, corporation tax rate in Ireland will rise to 15% for companies with a turnover of €750 million per annum in 2024.
All other companies will continue to pay the 12.5% tax rate.
Main image: View towards Dublin Docklands, Ireland. Picture by: Alamy.com