The Houses of the Oireachtas Parliamentary Budget Office (PBO) publishes report contextualising the growth of Ireland's Corporation Tax (CT) receipts

Read the full report HERE .

Annette Connolly, Director of the Parliamentary Budget Office said, “the note provides an in-depth analysis of corporation tax receipts, highlighting their significance for Ireland’s public finances.”

 Some of the key findings from the analytical note are:

• Growth of CT Receipts in Ireland: CT has become a significant source of government revenue. From 2014 to 2022 there was a rapid increase in CT receipts, with growth averaging 23% per year during the period, before stabilising in 2023.
• Resilience amidst international tax reforms: Despite major international tax initiatives such as the original OECD BEPS project and the phasing-out of hybrid tax planning structures used by US companies, Ireland's CT receipts have continued to grow.
• Globalisation of MNCs/Growing importance of Coordination Centres: MNCs, including US ones, have expanded their overseas activities in recent decades. Locations like Ireland have become key sites for MNC activities.
• Onshoring of Intellectual Property (IP): Major US technology companies have moved IP to Ireland, contributing to the increase in CT receipts.
• Computer Services exports: These grew from €32bn in 2012 to €196bn in 2022.
• Pharmaceutical exports: The pharmaceutical sector makes a significant contribution to Ireland’s CT revenue e.g., CT receipts from the chemical & pharma manufacturing sector grew from €2.645bn in 2021 to €5.536bn in 2022.
• Concentration Risk: CT payments are heavily concentrated among a few corporate taxpayers in Ireland. This poses a risk to revenue stability.
• Firm-Level Risk: The performance of individual large firms can significantly impact CT receipts.
• Footloose Industry Risk: The movement of businesses to other countries can affect CT revenues.
• Infrastructure Risk: The absence of adequate infrastructure and housing can reduce Ireland’s attractiveness for foreign direct investment (FDI).
• International Tax Reform Risk: Global tax changes could impact Ireland’s attractiveness to MNCs and therefore reduce its CT receipts e.g., the OECD's BEPS Pillar One, which aims to reallocate the profits of large MNCs based on sales location, could reduce Ireland's tax receipts due to its small market size.
• Offshoring of Intellectual Property Risk: The relocation of IP assets from Ireland to other jurisdictions could reduce the importance of MNC operations in Ireland and therefore reduce the level of taxable profit booked in the state.
• Volatility Risk: CT revenue can be unpredictable, affecting government spending and taxation strategies.

The author of the report, Peter O’Connor, a Senior Economist in the Houses of the Oireachtas, and Annette Connolly, the Director of the Parliamentary Budget Office, are both available to provide more information.  Please contact Stephen.higgins@oireachtas.ie

Read more on the work carried out by the Parliamentary Budget Office