Corporation tax take in August down over €1bn on last year
The amount of corporation tax collected in August was over a billion euro less than the amount taken in the same month last year.
In a statement, the Department of Finance said ‘a sharp decline’ had been expected but the 36% drop was ‘somewhat higher than anticipated.’
In August last year, the public finances received a surprise boost in corporation tax.
This year, the volatile nature of corporation tax swung the other way.
The Department of Finance said the drop in corporation tax last month compared to the same time last year underlined ‘the exceptional volatility in this tax head.’
For the year to the end of August, however, the amount of corporation tax collected is still up €864 million or 7.3% compared to the same period last year.
Income tax is still performing strongly, up €1.6 billion or 8.2%, in the period to the end of August.
VAT receipts are up €1.4 billion just over 11% in the eight months to the end of last month.
Overall, the Exchequer was in deficit at the end of August to the tune of €300 million.
This compares to a surplus of €6.3 billion at this point last year, but also includes a transfer earlier this year of €4 billion to the National Reserve Fund.
Peter Vale, Tax Partner at Grant Thornton Ireland described the exchequer tax receipts for August as “surprisingly poor”, with the biggest drop in corporation tax.
“Given the strength of the corporation tax receipts in the critical month of June, this was a surprise and underlines the volatility in corporation tax receipts,” he said.
Mr Vale said the weak corporation tax figures also reflect our dependence on a very small number of companies for a significant portion of corporation tax revenues.
“Poor results for one large company can have a significant adverse impact on overall corporation tax revenues,” he added.
After today’s figures, Mr Vale said the risk of weaker corporation tax receipts in the key month of November increases.
“Poor November figures could erode much of this year’s planned Budget surplus,” he said.