Dáil Éireann Debate, Tuesday - 27 June 2023
214. Deputy Richard Boyd Barrett asked the Minister for Finance the full-year revenue that would be generated by introducing a 4% levy on profits of pharmaceutical companies and private health companies; and if he will make a statement on the matter. [30997/23]
View answerAs the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current regime are its simplicity and that it applies to a broad base.
Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden onto their suppliers or consumers.
I am advised by Revenue that, based on information included in Corporation Tax returns filed for the tax year 2021, the potential yield from imposing a 4% levy on the profits of private health and pharmaceutical companies is tentatively estimated to be in the region of €1 billion, with over 97% of this from pharmaceutical companies. I understand private health companies to include medical and dental private practices and exclude private nursing homes and retail pharmacies.
This yield is based on the economic sector of companies on Revenue records based on NACE codes and does not include any yield associated with subsidiaries of these companies not primarily involved in the sectors mentioned in the question. The potential yield estimate assumes no behavioural change on the part of these companies.
It should be noted that Ireland’s corporation tax regime has been undergoing a process of significant reform in recent years. The Deputy will be aware that Ireland signed up to the OECD Two Pillar agreement in October 2021, Pillar Two of which provides for a global minimum effective rate of 15%, on a jurisdictional basis, for in-scope entities. In-scope entities are groups with turnover in excess of €750 million per annum. An EU Directive has been agreed to provide a foundation for a coordinated implementation of Pillar Two, in accordance with EU law, by EU Member States. Extensive progress has already been made towards transposition, with some preparatory legislative changes introduced in Finance Bill 2022, and a Feedback Statement published in March this year containing draft approaches to a large proportion of the complex legislation that will be required to transpose the Directive in Finance Bill 2023.
In consideration of the need for certainty regarding our corporation tax regime, and of the significant international corporate tax developments already underway, I do not believe it is appropriate to introduce any additional taxes or levies on companies at this time.
