Corporation tax receipts are expected to balloon to €37 billion by the end of the decade, according to the Department of Finance’s latest projections.
In its annual economic and fiscal outlook, published alongside the budget, the department forecasts revenue from the business tax to rise to a record €29.5 billion this year, up from the mid-year estimate of €24.5 billion, which it linked to a rebound in exports and “the associated increase in corporate profitability”.
It projected receipts would continue to rise for the rest of the decade, hitting €37.1 billion in 2030.
The period coincides with the introduction of new global minimum rate of 15 per cent rate, which is expected to bolster Ireland’s corporate tax take significantly.
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Although liable from this year, companies do not have to start making the additional payments on the new rate until 2026.
In its report, the department said corporation tax revenues in the first three quarters “point to very strong growth in this revenue stream once again this year”. It noted that, in the year to date, receipts were €3.4 billion (23.3 per cent) in advance of the same period a year earlier.
“This is attributable to inter alia the rebound in exports and the associated increase in corporate profitability,” it said.
However, it warned that this revenue stream was “highly dependent on a small handful of large, highly profitable multinational firms”.
“The data show that over half of all corporation tax is paid by just 10 companies,” it said.
At a briefing with reporters, the department’s chief economist John McCarthy acknowledged that corporate tax projections had been revised up by €5 billion this year on the back of “increased corporate profitability”. He also noted that forecasts over the medium term included a €2 billion narrowing of the base on the back of OECD-led global tax reforms, which will give bigger economies more taxing rights.
He said the department’s report also included two risk scenarios linked to changes in global economic conditions, one in which receipts do not rise further and another in which they fall back to 2020 levels.
Meanwhile, the Irish Fiscal Advisory Council (Ifac) has warned that the budget risks “repeating the boom-to-bust pattern” of the past.
In a strongly worded critique of the Coalition’s final budget before the next election, the council said the plan would pump billions of euro into an economy already running at full capacity. This would add to existing price pressures while widening the Government’s underlying deficit, it said.
“Budget 2025 highlights many positives: an economy with record rates of people at work, price pressures still high in many areas but lessening as energy costs fall, substantial revenues and steady growth,” Ifac said in a flash response to the budget on X.
“Yet with this strengthening of the economy comes pressures: worker shortages, difficulties delivering on infrastructure projects, and fast increases in prices such as rents and services,” it said.
In a clear reference to the Celtic Tiger era when spending was ramped up in an unsustainable fashion, the financial watchdog said Budget 2025 “repeats Ireland’s past mistakes of pumping billions into the economy when it is at full employment”.
Minister for Finance Jack Chamber’s tax and spending plans will distribute about €10.5 billion in permanent and temporary measures with welfare recipients, parents, renters and workers all benefiting significantly from the changes.
The average worker is expected to benefit by almost €1,000 a year on back of changes to tax credits, universal social charge (USC) and a widening of the income tax bands.
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Mr Chambers also announced a further €3 billion in funding for infrastructure, including an additional allocation of €1.25 billion for the Government’s main housing vehicle, the Land Development Agency (LDA).
He said the €14 billion Apple tax fund would be invested in projects relating to water, electricity, transport and housing with a more detailed plan to be announced early next year.
“It is clear that supply is the main constraint on growth at present. We are investing at scale to address these bottlenecks and put in place long-term solutions,” Mr Chambers said.
For the third successive year, the Government breached its own spending rule, which is supposed to limit the annual growth in spending to 5 per cent, eliciting accusations that it was trying to buy the election.
The surprise element was the size of the one-off package of temporary measures, which came to €2.2 billion instead of the expected €1.5 billion. They included double welfare payments, double child benefit payments this year plus further energy and rent credits aimed at counteracting the hike in living costs.
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But Sinn Féin finance spokesman Pearse Doherty said when it came to spending “the Government has been exposed again and again as wasters” of money, in reference to the controversial Oireachtas bike shed and the ballooning costs at the National Children’s Hospital.
He claimed the budget would not deliver “real change” in childcare, the health service and housing.
