Corporation tax receipts to end September, at €5.2 billion, are 6.3 per cent (€0.3 billion) ahead of profile. This mostly arises from the introduction of the International Financial Reporting Standard “IFRS 15” that replaces the existing standards on revenue.
This standard must be applied in respect of all financial reporting periods beginning on or after 1 January 2018 but early adoption is permitted. The “spreading” provisions introduced by Section 22 of Finance Act 2017 apply to all entities which applied IFRS 15 from the effective date (i.e. they apply to corporation tax returns for 2018 and subsequent years). However, where entities chose to early adopt IFRS 15, they had to elect to apply the “spreading” provisions in their 2017 corporation tax returns.Accordingly, it is expected that the bulk of the €0.3 billion surplus related to IFRS 15 is once-off in nature, will not reoccur and, accordingly, is not included in the 2019 forecast for corporation tax revenue. The Revenue Commissioners engaged with the companies affected to understand the impact and timing of the increase. They only became aware of the potential for IFRS 15 to significantly increase receipts in 2018 in the second quarter of this year. It should be noted these receipts arise from a small number of large companies. This issue was separately highlighted in the monthly Fiscal Monitor published by my Department in May, the Summer Economic Statement 2019, published in June, and, most recently, in Budget 2019 .