After a good start to the year, today’s exchequer figures represent a bit of a mixed bag.
On the positive side, income tax receipts remained buoyant in February, following on from a strong January. While this is not unexpected given the positive labour market, it had taken some time for increased employment to translate into additional income tax receipts.
While both VAT and corporation tax figures are now lagging behind last year, we wouldn’t read too much into these figures. The early months of the year are not major months for corporation tax receipts. After a strong January, there was some slippage in the VAT receipts for February, although again this is a quiet month for VAT receipts.
Nonetheless, both VAT and corporation tax will be monitored closely over the next couple of months. The expectation is that corporation tax figures will remain strong in 2018, although it will be May/June before we start to get a better picture of the predicted annual tax take.
As ever, there is a lot on the horizon that could impact on Ireland from a tax perspective, with US tax reform and EU Digital tax proposals the most prominent.
Our view is that US tax reform will not have a major adverse impact on Ireland and can be good for both countries. The EU’s Digital tax proposals have more potential to adversely impact small countries such as Ireland. However, it is worth noting that the proposals require unanimity in order to become law – any country can exercise its veto.
