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The IDA has reported the strongest ever investment approvals for the 6-month period to June 2022 with investments up 9% on 2021, which equates to 18,000 new jobs. This is mirrored by a strong corporate tax take, with the receipts year to date standing at €11.8 billion, 68.5% ahead of 2021, which was a very strong year in itself. August 2022 corporate tax receipts hit €2.8bn, comparing with receipts of just over €1bn in August 2021, further indication of strong results in the multinational sector.
It is important to remember, however, that our corporate tax receipts are concentrated on a small number of multinational firms. Approximately 80% of corporate tax receipts along with 30% of income tax receipts are related to foreign multinationals. The economy’s substantial reliance on corporate tax receipts is highlighted in the government’s recent analysis on corporation Tax in ‘De-Risking the Public Finances – Assessing Corporation Tax Receipts’.
Any shock to FDI would have significant implications for public finances through the State’s two largest revenue streams.
Any significant changes to the corporate tax regime are unlikely, there is a lot of work already ongoing on the back of both OECD and EU measures. However, there may well be reference to the shift in international tax rules that will be rolled out in the coming years, with nothing specific announced on Budget day.
What we know is that the Minister for Finance needs to protect our two largest revenue streams; income tax and corporation tax while also tackle the cost of living and energy crises and balance competing demands from housing and climate. Not an easy feat!