Mystery surrounding sources of corporate tax bounty which has hit €6.3bn

Corporate taxes continued to flood into the exchequer’s coffers last month, compounding a mystery about their source and raising doubts about whether a future government can rely on the company receipts after the election.

The Revenue Commissioners and the Department of Finance have moved in recent weeks to dampen down speculation that only a handful of multinationals are accounting for the huge bounty.

The unexpected treasure has also prompted suggestions multinationals based in Ireland are paying larger tax bills here after worldwide efforts to stop tax abuses.

An unprecedented spotlight has fallen on closing down outrageous corporate tax planning amid allegations that the world’s largest companies are not paying enough tax to governments around the world in the first place.

However, a letter written by Revenue released last week has said much of the unexpected corporate bounty coming Ireland’s way was accounted for by a number of multinationals and that the company tax gains were broad-based across the economy.

Yesterday, the Department of Finance again repeated that the corporate tax receipts were a sound source of revenues for the Government.

“Over-performance in the year to date is broad-based and primarily relates to improved trading and some timing factors,” it said.

Overall, corporate tax brought in just over €6.36bn in the first 11 months of the year.

But that amount represents €2.33bn more than the department had anticipated it would collect from taxing company profits just a year ago.

The unexpected corporate bounty accounted for the bulk of all excess tax receipts collected to date, of over €2.94bn.

Alan McQuaid, chief economist at Merrion Capital, said the possibility remained that the additional corporate tax receipts were collected because of the unprecedented focus on corporates and their tax affairs.

Investigations have included a process led by the richest countries which has sought to limit the influence of ‘brass-plate’ tax havens around the world in corporate tax planning.

Those efforts did not specifically involve Ireland, but Dublin acted in recent budgets to phase out the egregious ‘double Irish’ accounting practices which facilitate large corporations to move profits around the world.

As the race for the White House heats up, US politicians have also questioned practices by their US mega-companies to escape paying the relatively high level of tax in the US by incorporating in low-tax jurisdictions, including Ireland.

Also, a decision is pending by Brussels on whether Ireland struck a too-sweet tax deal with Apple 15 years ago.

John Whelan, former chief executive of the Irish Exporters’ Association and now a leading trade consultant, said there is some surprise that the huge corporate tax bounty was not anticipated.

“The real question for the minister and his department is why they have not been anticipating a much higher corporation tax take and why their large business monitoring sector has not been closer to the main payers, the multinational corporations,” he said.

Mr Whelan believes full-year estimates for corporation tax receipts will be exceeded by the end of the year.