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Ireland Heavily Reliant On MNE Corporate Tax Payments: Review

by Jason Gorringe, Tax-News.com, London

22 February 2017

As part of a review of corporate tax policy, the Irish Finance Ministry has said reliance on tax revenues from foreign-owned multinationals is contributing "to the volatility and unpredictability of corporate tax receipts."

The Finance Ministry has launched a public consultation that will feed into an independent review of Ireland's corporate tax code.

In a section on the role and sustainability of corporation tax receipts, the consultation document notes that corporation tax receipts are highly concentrated. It explains that 0.2 percent of corporation tax cases contribute 65.3 percent of net receipts. Foreign-owned multinationals accounted for 80 percent of net receipts in 2015.

In 2014, the corporation tax yield was EUR4.6bn (USD4.8bn). The yield rose by 49 percent to EUR6.87bn in 2015, and increased again the following year, to EUR7.35bn. Corporation tax was the fifth-largest contributor to total tax receipts in 2014, and the fourth largest in 2015.

The consultation document states: "This increase in corporation tax receipts has raised questions regarding the sustainability of corporation tax receipts, and as to whether the increase in 2015 and 2016 represents a step change or series of once-offs."

According to the Finance Ministry, "The reliance on foreign-owned MNE exporters contributes to the volatility and unpredictability of corporation tax receipts, as receipts are exposed to (i) idiosyncratic shocks such as the 'patent cliff' and (ii) changes in the structure and strategies of MNE groups."

The consultation closes on April 4.

TAGS: tax | Ireland | corporation tax | multinationals | transfer pricing | revenue statistics | BEPS

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