Sunday 15 September 2019

Decline in corporation tax haul

  

Speech: Finance Minister Paschal Donohoe. Photo: Tony Gavin
Speech: Finance Minister Paschal Donohoe. Photo: Tony Gavin

Shawn Pogatchnik

The European Commission has called on Ireland to crack down on companies' aggressive tax planning and to broaden its tax base,

The latest exchequer returns revealed a sharper-than-forecast decline in the corporation tax haul.

The Department of Finance reported that tax collections this year to the end of May have exceeded €21.7bn, which is 5.7pc higher than in 2018 but 1.1pc below its forecast.

The biggest factor in the shortfall was corporation tax, which has reached €1.8bn this year - but 11.4pc below target and 13.6pc off the 2018 mark.

In a statement, the Department said corporation tax collections were expected to recover to projected levels in June, the second-busiest month on the corporate tax schedule with collections driven by 2019 corporate earnings.

But in its Spring Package guidance to Ireland, the EU's executive arm said Ireland needed to become less reliant on corporation tax and other volatile sources of revenue and still wasn't doing enough to deter tax avoidance by firms, especially those exporting profits outside the EU. "The fight against aggressive tax planning is essential to make tax systems more efficient and fair," the Commission said in its report.

The Department of Finance and European Commission broadly agreed that Ireland appears on course to meet its deficit spending targets for 2019 and 2020 under the Stability and Growth Pact governing Eurozone members. The Commission said to achieve this, Ireland must not increase net primary government expenditure more than 3.7pc in 2020.

Irish Independent

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