With all the adverse comment regarding the impact of Brexit on Ireland, it's nice to get some positive economic data in the form of exchequer figures for the first half of the year. Today's figures show that tax receipts for the first half of the year are in good shape, with corporation tax and excise receipts particularly strong. The figures also show stronger income tax and VAT receipts, reflecting greater disposable income in the economy.
June itself is an important month for corporation tax and the figures are impressive, with receipts for this tax head ahead of target and ahead of the same month last year. A possible explanation for the strong corporation tax receipts is companies moving their valuable intellectual property and related profits away from tax havens to Ireland. This is a trend we expect to see continue as groups reorganise in light of the OECD's BEPS anti-tax avoidance drive, with a greater alignment of taxable profits and real substance. This is a significant opportunity for Ireland.
Proposed UK tax cut impact
Increased foreign investment in Ireland is one of the few potential positives for Ireland arising from Brexit. Perhaps not surprisingly, the UK has sought to make its own offering more attractive with an announcement to lower its rate below 15%, thereby competing directly with our 12.5% rate. Surveys in the past have shown that companies are attracted to Ireland by our low corporation tax rate.
However, they stay here because of our access to EU markets. Thus, notwithstanding the proposed UK tax cut, Ireland's attentiveness as a better proposition for key forgiven direct investment should remain intact post Brexit, particularly given the uncertainty surrounding negotiations on future EU market access for the UK.