Corporate tax above target by €3bn in 2 years

For a second successive year corporate tax revenues have risen steeply, but Government officials and ministers are not letting on to the sources of the bounty.

The exchequer returns for December were released yesterday and complete the picture of the tax and spend figures for 2016.

Despite the traditional festive focus on Vat and excise duty, tax revenues, and cross-border and online shopping after the Brexit-driven plunge in sterling, there is no disguising that corporate taxes collected from multinationals have soared again.

We know that most of this bounty was accounted for by multinationals because a small number of large companies account for an outsized share of all corporate profits paid to the State.

What we won’t officially know or be officially told is the identity, or the reasons that a small number of giant companies with bases here have paid so much more in taxes. And not knowing is a something of a matter of public concern.

With a haul of €7.35bn for 2016, corporation taxes took in €737m more than was anticipated in the year. In 2015, the unexpected additional bounty amounted to €2.3bn.

Adding the two figures means the State has taken in over €3bn more than it had bargained for from a single tax source over the last two years.

In 2015, the State collected €45.6bn in taxes, with corporate tax receipts accounting for €6.87bn of those total revenues.

Yesterday’s release showed overall tax revenues amounted to €47.86bn, up by €2.26bn, or 5%, from 2015.

In all, the State collected €639m more in 2016 than was anticipated. That’s significant because the over-performance of corporation tax receipts in the year more than offset the underperformance of another of the “big four” tax sources: Vat.

There was a further twist to the corporate tax story: Company tax receipts underperformed in December, taking in €254m less in the month than anticipated. But such was the size of the take in the previous 11 months the size of the corporate tax haul remains substantial.

Across the rest of the big four tax sources, the picture was much more mixed. Vat brought in €12.42bn in the year, up by a respectable-looking 4% from 2015.

However, Vat receipts, which for most of the year failed to hit their targets, fell short in December. Vat receipts brought in €26m less in revenues in the month, and €439m less than anticipated for the full 12 months.

Everything from the Brexit-driven fall in the value of sterling against the euro and cross-border and online shopping have been blamed by observers for the Vat shortfall.

However, even before the Brexit vote and the precipitous drop in the value of sterling, Vat receipts were running weaker than expected.

The Finance Department yesterday highlighted the healthy annual rise in Vat receipts, adding that the underperformance in December “can be attributed to higher than expected Vat repayments”.

Nonetheless, analysts said that, with December a so-called non-Vat month, they would be looking closely at the performance of Vat in the coming months for signs of any Brexit-related slowdown.

At €5.71bn, excise duties were up almost 8% in the year, and were performing slightly ahead of target.