Corporation tax receipts show unexpected weakness in May

The exchequer posted a deficit of €6m at the end of May. This compares with a surplus of €1.4bn in the same period last year, with the difference driven by the transfer of €4bn to the National Reserve Fund (NRF) in February to create a buffer for future economic shocks.  Photo: Laura Hutton/RollingNews.ie

The Government collected almost €9bn in tax revenues in May, marking only a 1% rise from the same month a year ago, as “volatile” corporation tax receipts fail to perform.

The tax haul in the month was boosted by over 9% rise in income tax receipts but, the Department of Finance highlighted a decline in corporation tax receipts due to “higher repayments and lower profitability” in the month.

Total corporation tax receipts in May ran to €2.7bn, down more than 6% from the same month a year ago.

Vat receipts brought in €3bn in May which, although slightly ahead of a year earlier, was “a more muted performance than recent months”, the department said, citing timing issues.

And the Government collected almost €2.6bn in income tax receipts, up more than 9%.

However, corporation tax since the start of the year have continued to boom, but the latest exchequer figures may bolster the argument that the State can’t overly rely on the profits derived from foreign-owned multinationals.

Nonetheless, despite the underwhelming performance of corporation tax receipts in the latest month, May’s figures show that government finances are in a very healthy state.

The exchequer brought in a total of €33bn over the first five months, driven by three of the big four tax sources.

At almost €6.3bn for the first five months of the year, corporation revenues are up by a huge 21% from the same period a year earlier.

Overall, income tax receipts jumped to €13bn in the five months to May which is up €1.1bn.

The exchequer posted a deficit of €6m at the end of May. This compares with a surplus of €1.4bn in the same period last year, with the difference driven by the transfer of €4bn to the National Reserve Fund (NRF) in February to create a buffer for future economic shocks.

Peter Vale, tax partner at Grant Thornton Ireland, said the latest figures showed “some signs of a slowdown in key tax heads.” “It would be wrong to read too much into one month. At the moment it looks like strong corporation tax receipts will help generate large budget surpluses for the foreseeable future,” Mr Vale said.