The focus remained yesterday on corporate tax as the exchequer returns showed company tax revenues continuing to run ahead of profile.
After a week of controversy involving the EU ruling that Ireland must raise a €13bn demand in back taxes from Apple, the tax and spend figures for the first eight months of the year showed the exchequer had taken in €449m more than it had anticipated at the end of August, mainly due to the powerful performance of corporate taxes earlier this year.
In the month, corporate tax receipts brought in only €26m more than was anticipated, but the cumulative figure from company revenues — one of the ‘big four’ tax heads — has reached almost €3.5bn already this year.
The bulk of corporate tax receipts in the past have tended to flow in the last few months of the year. Last year, revenues from corporate tax receipts set a new record for the State, bringing in €6.87bn, almost €2.3bn more than was anticipated.
The Government has said the huge outperformance of corporate tax receipts last year was down to the way multinationals re-arranged their tax affairs, including transfers of intellectual property and so-called tax inversions, but has refused to name the specific companies involved.
Many analysts believe that much of the surge in corporate taxes last year was due to Apple.
“While August is not a significant month in terms of corporation tax, receipts within the month were €26m above target. On a cumulative basis, corporation tax receipts have been strong so far this year and are now €508m higher than expected,” the Department of Finance said yesterday.
Conall Mac Coille, chief economist at Davy Stockbrokers, said the return was based on companies bringing tax structures onshore to Ireland.
The outperformance this year, which has occurred even before the big payment months, will again raise longstanding questions about the sustainability of corporate tax receipts, he said.
Tax receipts overall surged to over €29bn, up €1.7bn or 6.2% in the year, as the exchequer took in €449m or 1.6% more in revenues than it anticipated as this stage in the year.
The monthly figures showed a surprising underperformance in income tax, but with more people working, the figures are likely to be a shortlived phenomenon.
On excise duties, a €97m shortfall in the month, “was primarily due to weak tobacco receipts. As previously highlighted, the front loading of excise receipts on tobacco is expected to continue to unwind during the second half of the year,” the department said.
It noted excise duties of over €4bn for the first eight months were €278m above target.
Despite a good performance in a non-Vat payment month, concerns about Vat will likely persist, however.
At over €8.27bn, Vat receipts have so far this year brought in €285m less than anticipated.
But for the outperformance of corporate taxes, the underperformance of Vat revenues would have raised serious concerns about the Government’s overall revenues.
On the spending side, the figures showed that total net expenditure, at €27.7bn, is running €354m below target so far this year.
Spending is up €336m from a year earlier, however.
© Irish Examiner Ltd. All rights reserved