Record corporate tax levy lowers Irish budget deficit

0

A man walks past the offices of the Irish Financial Services Center in Dublin, Ireland on April 24, 2017. REUTERS / Clodagh Kilcoyne

Register now for FREE and unlimited access to Reuters.com

Register

  • The budget deficit falls to 4% of GNI * against 5.9% forecast
  • Annual corporate tax revenues exceed € 15 billion
  • Global tax returns far exceed pre-pandemic record

DUBLIN, Jan. 5 (Reuters) – Ireland recorded a 2021 budget deficit lower than expected by around 4% of the economy due to increased tax revenues, including another record contribution from the business sector , estimated Wednesday the Ministry of Finance.

The ministry predicted in October that it would end the year with a deficit of 5.9% of modified gross national income – the most accurate measure of the size of the Irish economy – up from 8.8% last year .

However, the 68.4 billion euros in taxes collected last year was the highest return on record, beating by more than 9 billion euros the previous peak set in 2019, before the COVID-pandemic. 19 does not strike.

Register now for FREE and unlimited access to Reuters.com

Register

Spending was also 1.5% lower than forecast as departments did not use the record amounts allocated to them.

The 15.3 billion euros in corporation tax are up sharply from the previous record of 11.8 billion euros in 2020 and almost double the annual amount levied just four years ago.

Business revenue is mainly generated by the large cluster of multinational companies attracted to Ireland due to its low corporate tax rate. Total business returns for 2021 almost exceeded the full annual VAT for the first time.

This represented a “phenomenal development,” Finance Department chief economist John McCarthy told a press conference.

Income tax and VAT – the two largest tax categories – ended last year 4.8% and 7.5% above forecast as the economy weathered the one of the longest COVID-19 shutdowns in Europe in the first half of 2021 and wages have risen sharply in high-income sectors such as technology.

McCarthy added that Ireland is likely to show a lower economic activity deficit than the 3.4% economic activity forecast for 2022 if the current wave of COVID-19 recedes relatively quickly. A deficit of just 0.4% is currently forecast for 2023.

He also expects corporate tax revenues to rise again this year before international reforms to the way large multinationals are taxed get underway next year.

Finance Minister Paschal Donohoe said it was very likely that at some point corporate revenues would decline.

Register now for FREE and unlimited access to Reuters.com

Register

Reporting by Padraic Halpin; Editing by Pravin Char and Hugh Lawson

Our standards: Thomson Reuters Trust Principles.

Share.

Comments are closed.