PAC to start its examination of Corporation Tax receipts

The Public Accounts Committee will meet with officials from the Revenue Commissioners and the Department of Finance as it begins its hearings on Corporation Tax receipts tomorrow, Thursday, 30 November 2017.

The schedule for tomorrow’s meeting is:

(i) Business of the Committee
(ii) C&AG Report 2016 Chapter 20: Corporation Tax receipts

Committee Chairman Seán Fleming said: “Tomorrow we will begin our hearings on Corporation Tax receipts. Among the issues the Committee may focus on are: the accuracy of corporation tax receipts forecasting; the use of significant tax credits and reliefs and the effective rate of corporation tax; how Ireland compares with other OECD countries in terms of statutory and effective corporation tax rates; and the concentration of tax receipts in terms of economic sectors and number of taxpayers.

Corporation tax receipts are highly concentrated and difficult to predict and have displayed volatility in recent years. However, an examination by the C&AG found that in 2015, the top 100 companies, ranked by taxable income, had a lower average effective corporation tax rate (9.3%) than the rate applying to all companies of 9.8%. It also found that 13 of the 100 companies with the highest taxable income had an effective rate of less than 1%, reflecting the use of significant tax credits and reliefs, in particular double taxation relief and research and development tax credits.

We will be keen to examine this in greater detail with officials from the Revenue Commissioners and the Department of Finance at our meeting tomorrow. For example, why did the cost of capital allowances increase by almost 150% between 2014 and 2015, given that the number of claims only increased by 8%? Also, why did the cost of the research and development tax credit increase from €553m in 2014 to €708m in 2015, given that the number of claims decreased by 2%?

As accurate forecasting of tax revenue is a fundamental part of overall public sector budgeting and given the obvious high degree of inaccuracy of the current forecasting methodology, we will want to know if the Department of Finance investigated alternative methods of forecasting, while we will be interested if Revenue could provide any information on huge swings and volatility in some sectors in the period 2011 to 2016.”

This PAC meeting will start in Committee Room 3 at 9am on Thursday, 30 November 2017.

Committee proceedings can be viewed live here.

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Committee Membership:

Bobby Aylward        Fianna Fáil
Peter Burke        Fine Gael
Shane Cassells        Fianna Fáil
Catherine Connolly    Independent
David Cullinane        Sinn Féin
Alan Farrell        Fine Gael
Séan Fleming        Fianna Fáil
Alan Kelly        Labour
Marc MacSharry        Fianna Fáil
Pat Deering   Fine Gael
Mary Lou McDonald    Sinn Féin
Noel Rock        Fine Gael
Catherine Murphy    Social Democrats-Green Party Group