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Exchequer Returns October 2018 - Peter Vale commentary

Peter Vale Peter Vale

The first set of post Budget figures will please the Minister, with receipts for the year to date ahead both of target and the same period last year.   

As expected, corporation tax receipts remain strong, with the expected bounty announced in the Budget speech hitting the account in October.  It is likely that for the year as a whole, deficits elsewhere will be mopped up by a large surplus of corporation tax receipts, with the figures now over €1bn ahead of target. 

The future sustainability of the corporation tax base remains unclear.  The introduction of a tax on digital revenues is a risk, with any successful EU move on this predicted to cost the Irish Exchequer circa €160m per annum.

The bigger risk is the impact on the attractiveness of the Irish corporate tax regime if taxes are levied elsewhere on the profits of Irish companies operating overseas, with the benefit of our low 12.5% tax rate consequently eroded.  However, while uncertainty remains on this front, we continue to view the strong corporate tax revenues as sustainable.

In summary, this is another robust set of tax figures.  Despite turmoil on several fronts, tax receipts are more than holding up, with the picture for 2019 looking positive.