Soaring corporate tax is ‘incredible vulnerability’ for Irish economy – Official | Investment News

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DUBLIN (Reuters) – Ireland’s reliance on just 10 multinational companies to pay more than half of the country’s growing tax revenue represents an “incredible level of vulnerability” for the economy, the country’s chief economist warned on Monday. Ministry of Finance.

Corporate revenue, mainly generated by large multinationals attracted to Ireland due to its low corporate tax rate, has surged in recent years and accounted for almost a quarter of all tax revenue in the first half of 2022 after a jump of 53% year-on-year.

The Ministry of Finance said this meant that one in every 8 euros collected by the state came from “an exceptionally small number of companies” and that a shock which had an impact on the multinational sector would have serious tax implications. for Ireland.

“It’s an incredible level of vulnerability,” Finance Department chief economist John McCarthy told reporters, saying the level of concentration in such a small number of companies is something he doesn’t. has never seen in any other economy.

“It’s something that concerns us a lot.”

The level of concentration is even higher, including the income tax paid by multinationals such as Facebook, Google and Pfizer, which employ around one in nine Irish workers in often high-paying jobs, McCarthy added.

McCarthy said he was more concerned about the overreliance on these types of businesses than the impact a global overhaul of corporate tax regimes could have on Ireland’s position in as a multinational investment hub.

He also said the Treasury would likely levy 18-19 billion euros in corporation tax this year, up from 16.9 billion forecast just three months ago and a five-fold increase over the past decade.

Finance Minister Paschal Donohoe said he had long shared the concerns expressed by McCarthy, and said the best way to manage the risk was to return to the pre-pandemic position where corporate tax revenues are not used to finance permanent expenses.

His department predicted on Monday that the Treasury was likely to post a modest surplus this year, but that was only due to unusually high corporate tax revenue and if revenue had remained at pre-pandemic levels. , a deficit of 1.5% of GDP would be in prospect this year.

Ireland increased its planned budget package for 2023 on Monday due to the expected return to surplus.

(Reporting by Padraic Halpin; Editing by David Gregorio)

Copyright 2022 Thomson Reuters.

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