Minister McGrath welcomes publication of Corporation Tax Payments and Returns Report by the Revenue Commissioners

Minister for Finance, Michael McGrath TD, has welcomed the publication of the 2023 CT receipts and 2022 returns paper by the Revenue Commissioners.

The past decade has seen a notable growth in corporation tax receipts in Ireland. This growth has become more pronounced in the years up to and including 2022, with corporation tax more than doubling since 2019. Last year represented the twelfth consecutive year of annual growth from the low point of approximately €3.5 billion in 2011.

Corporation tax is now the second largest tax-head representing 27% of net tax receipts in 2023.

The growth in corporation tax receipts has been extremely beneficial to the State’s finances. However, the risks relating to them are significant. Receipts from large companies accounted for 85% of all corporation tax receipts received in 2022 and the top 10 companies paid 52%. This means that a significant portion of our corporation tax could be windfall in nature.

Corporation tax payments for 2023 continues to show a strong trend of recovery in profitability for the SME sector, with payments for 2023 being €385 million above 2022.

Gross trading profits of all companies were €317.5 billion for 2022 according to returns, up €60.7 billion from 2021. Similarly, preliminary taxes in 2023 for all companies were 3% higher than in 2022, which indicates that this increase in profitability has been maintained.

Commenting, Minister McGrath said,

“I welcome the publication of the Corporation Tax 2023 Payments and 2022 Returns report by the Revenue Commissioners.

This is an extremely valuable piece of work that highlights key trends in what is now the second largest tax revenue stream for the State. Last year we took in nearly €24 billion in corporation tax.

However, we must not forget that these receipts are highly concentrated with just a few firms paying the bulk of the tax. My Department has estimated that roughly half of the €24 billion could be windfall in nature. In addition, we have seen major changes in the corporation tax environment in recent years with the OECD BEPS process. Ireland has committed to the two pillar agreement and has fully implemented Pillar II and is fully engaged in negotiations on Pillar I.

What all this means is that we cannot afford to fund permanent increases in expenditure on the back of tax receipts that may be temporary in nature.

Government has taken steps to mitigate this risk. Government debt has fallen by around €15 billion from its peak of €236 billion during the pandemic and we are continuing to run strong Government surpluses.

I am currently bringing legislation through the Oireachtas that would establish two new long-term funds, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.

The Future Ireland Fund will have a long term investment focus and has the potential to grow to €100 billion by 2035. It will be used in the coming decades to pay for extra costs we know will occur due to demographics and the climate and digital transitions.

The Infrastructure Climate and Nature Fund will be used to maintain our high levels of capital investment during an economic downturn. This will ensure that critical pieces of infrastructure are delivered and that employment is supported at a time when the economy needs it most.

I expect that this legislation will be passed by the summer and the two new funds will be established later this year.”

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