DUBLIN (Reuters) -Booming Irish corporate tax receipts could grow further in 2025 and 2026, even as the threat of potentially damaging tariffs hangs over the volatile source of revenue, the country’s independent fiscal watchdog said on Tuesday.
A six-fold jump in corporate tax revenue since 2014 to 28 billion euros last year, or 29% of all tax collected – even before an extra 11 billion euros of Apple back taxes is included – has handed Ireland Europe’s healthiest public finances.
While Ireland’s finance ministry expects the taxes that are mostly paid by U.S. multinationals to fall by 2% this year and return to 2024 levels in 2026, the Irish Fiscal Advisory Council (IFAC) sees four factors why they could, instead, increase.
Firstly, it said the finance ministry’s estimate that global tax reforms agreed five years ago would reduce corporate tax revenue by 2 billion euros a year from 2026 was not credible and that they will likely add around 3 billion euros from 2026.
The first part of the OECD-led reforms that Ireland expected to divert corporate tax receipts to other countries has not been implemented, whereas Dublin has been forced to increase its low corporate tax rate to 15% from 12.5% for larger companies.
IFAC said that many of Ireland’s main corporate taxpayers – based in the technology and pharmaceutical sectors – were not currently impacted by U.S. tariffs and expected their global profits to increase this year.
A 154% year-on-year jump in Irish pharmaceutical exports in the first quarter, as some U.S. drugmakers with Irish plants reported stocking up ahead of threatened tariffs, may separately lead to higher corporate tax payments this year, IFAC said.
Finally, the exhaustion of capital allowances some firms used when they moved valuable intellectual property assets to Ireland could potentially add “billions” of euros more in corporate tax in the coming years, IFAC chair Seamus Coffey added.
Coffey said IFAC did not see any downside risks to the tax take in the short term, based on broad macroeconomic trends and the current tariff regime.
“We don’t see it but it doesn’t mean it’s not there. That’s down to the profitability and decisions these companies make,” Coffey told a news conference.
($1 = 0.8760 euros)
(Reporting by Padraic HalpinEditing by Bernadette Baum)
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