On August 24, 2023 the Irish Department of Finance has published its Annual Taxation Report. According to the report the with a total amount of EUR 83.1 billion the Irish tax revenues grew to the highest level ever. In 2022 the highly profitable ICT sector accounts for some 35 per cent of corporate tax receipts and around 10 per cent of income tax revenues.




Tax revenue has surpassed its pre-pandemic position

  • In line with the post-pandemic rebound in economic activity, tax revenues grew strongly last year; overall receipts amounted to € 83.1 billion, the highest level ever, and almost €24 billion (40 per cent) above pre-pandemic levels.
  • Strong growth was evident across almost all revenue streams; the only notable exception was excise duty receipts, which were negatively impacted by Government policy to address the cost of living challenge.


The headline figures masked underlying vulnerabilities

  • Corporate tax receipts last year are more than double their pre-pandemic level and have increased five-fold in a decade. As a result, corporate tax has overtaken VAT as the State’s second-largest revenue stream.
  • Analysis by the Department of Finance suggests that much of this surge in corporate tax receipts – c. € 11 billion or almost half of the total last year – is potentially transitory in nature, and should be treated as ‘windfall’.
  • Government has acted to mitigate the risk of an overreliance on vulnerable corporate tax receipts by inter alia committing part of the windfall to the National Reserve Fund and outlining proposals for a longer-term savings vehicle.

Revenues are increasingly reliant on the potentially vulnerable ICT sector

  • Analysis at the aggregate level is complemented by an examination of sectoral trends: the data show that the highly profitable ICT sector now accounts for some 35 per cent of corporate tax receipts and around 10 per cent of income tax revenues.
  • This sector appears to be in the process of ‘right-sizing’, following a rapid expansion during the pandemic; the scale and speed of this correction could potentially have implications for the State’s revenue stream.


Important structural changes in the composition of tax revenue have been underway

  • In some of the key tax revenue streams, a notable feature in recent years has been a shift in composition of receipts.
  • For instance, the income tax base has been broadened with the introduction of the Universal Social  Charge  (USC);  working  in  the  opposite  direction,  Deposit  Interest Retention Tax (DIRT, paid on bank deposits) has become much less important as a source of revenue.
  • In relation to excise duties, the long-term trend decline in the volume of tobacco consumption has been offset (from a tax revenue perspective) by successive tax increases.
  • Motor fuel has been gradually declining as a share of overall excise receipts while, reflecting policy decisions, carbon tax receipts have been increasing in importance.


The Annual Taxation Report 2023 as released by the Irish Department of Finance on August 24, 2023 can be downloaded in Pdf size from here.



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