Irish corporate tax revenues set to decline from 2023 onwards, says Donohoe
New figures revealed that Irish tax receipts surged to their highest ever level last year at 68.4 billion euro.
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Your support makes all the difference.The Irish Finance Minister has said tax receipts from corporation tax in Ireland will begin to decline from 2023 onwards.
On Wednesday, new figures revealed that Irish tax receipts surged to their highest ever level last year at 68.4 billion euro, reducing the Exchequer deficit down to 7.3 billion euro.
It is the highest recorded tax yield, and more than nine billion euro more than the previous highest figure in 2019.
Corporation tax soared by almost 30%, and is now the country’s second largest revenue in the state.
For years, a low corporate tax rate has been a key part of the Irish economic policy.
If you look at where we are with this rate, overall Ireland will lose money and nobody knows this better than me
However, last year Ireland agreed to join the OECD framework for a global rate of 15% tax, giving up its highly prized previous rate of 12.5%.
On Thursday, Paschal Donohoe said he expects that from 2023 onwards Ireland will begin to see corporate tax revenue decline.
“If you look at where we are with this rate, overall Ireland will lose money and nobody knows this better than me,” he said.
“We’ll lose money because of two things happening. The first thing we will lose money from over time will be the full implementation of the global tax reform package.”
He added that this was not just the reformed rate of tax, but “the change that will happen regarding where tax is paid”.
“Secondly, many of the large tax payers are in a position of very high profitability due to other things that have happened in the global economy.
“And we cannot, nor should we expect, that to continue. So we will get to a point where our corporate tax revenue – and I’ve been saying this in particular since 2018 – will come down,” he told RTE radio.
He said that he expects that in the Government Budget for 2023, the Irish corporate tax rate will be set at 15%.
According to the latest data from the Department of Finance, consumer spending and an increase in wages helped bolster the tax figures.
The Department of Finance said that Ireland now gets one euro out of every 4.50 euro collected in overall tax revenue.
Figures from the department show an Exchequer deficit of 7.4 billion euro, an improvement of just under five billion euro compared with 2020.
Chief economist at the Department of Finance John McCarthy said that total spending for last year amounted to around 105.5 billion euro.
Capital spending amounted to almost 10 billion euro, an increase of around 3% compared with 2020.