3 days ago
- Business
- Irish Independent
VAT receipts up but corporation tax takes ‘marked' drop from last year
The amount of Value Added Tax (Vat) collected to the end of May was €11.4bn, up €0.6bn or 5.5pc on the same period in 2024, despite the turbulence caused by US president Donald Trump's tariffs.
In May, a Vat-due month, some €3.5bn was collected, which was €0.1bn more than in the same month last year.
Daryl Hanberry, head of tax and legal, at Deloitte Ireland, said: the increase in Vat was good news. 'This reflects continued strong levels of employment and the fact that consumers are continuing to spend. We can't take this for granted, and we need to invest further for our growing population,' he said.
Income tax receipts in May were €2.8bn, according to the latest Exchequer returns, which was up 3.6pc on the same month last year. On a cumulative basis, €14.5bn in income tax has been collected in the year so far, up €0.6bn or 4.5pc. This reflects a scenario of almost full employment.
Total tax receipts of €38.2bn were collected to the end of May, up €3bn or 8.5pc. But when the windfall Apple tax revenues are taken out, the figure stood at €36.4bn, which was just €1.3bn or 3.6pc ahead.
May is considered an important month for corporation tax revenues, and €2.5bn was collected, which was down €1.1bn, or just over 30pc, on the same month last year. Receipts in May 2024 were boosted by one-off factors, however.
Overall, and excluding money from the Apple tax settlement, corporation tax this year stands at €5.7bn, which is €0.6bn or 9.4pc down on the same period in 2024.
Orla Gavin, head of tax at KPMG, said: 'The dip in corporation tax receipts in May, down just over €1bn on May 2024, is unexpected, given the steady performance of corporation tax payments to date this year.
'While May is a significant month for corporate tax payments, the decline may be due to the concentrated nature of taxpayers rather than a general indication of business performance owing to global trade uncertainties. The key months of June and November will be crucial in assessing whether the government's corporation-tax forecasts for the year are achievable.'
Paschal Donohoe, the minister for finance, also said the most notable feature of the Exchequer returns for May was in respect of corporation tax, which he agreed had seen a 'marked' drop year-on-year.
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'While this reflects once-off factors last year, it nonetheless highlights the degree of concentration in the corporate tax base, wherein a small number of multinational firms can significantly impact on the overall tax yield,' he added.
'In a context of unprecedented uncertainty in the international economic landscape, this serves as a timely reminder of Ireland's exposure to changes in the global trading environment, and of the vital importance of adhering to a sensible and sustainable budgetary strategy.'
Total gross voted expenditure in the first five months of the year amounted to just under €42bn, up just over 8pc on last year, but €37m behind profile.
Overall, an Exchequer surplus of €4bn was recorded to the end of May. This compares to a surplus of €0.8bn last year, but the comparison is again distorted by the Apple tax settlement. Once that is taken out, the underlying surplus of €0.7bn is €0.1bn behind the same period last year.
The Minister for Public Expenditure, Jack Chambers, said: 'We are seeing a significant increase in capital spending in particular, up by almost a third year on year. This underscores Government commitment to tackling infrastructure gaps in our economy and society.
"I am currently undertaking a review of the National Development Plan to further target investment in the critical, growth enabling areas for the rest of the decade and will be bringing this review to Government next month.'
