DUBLIN, Nov 3 (Reuters) - Ireland’s tax take fell 5.3% in the first 10 months of 2020, declining at the sharpest rate since the COVID-19 pandemic began after a large shortfall in corporation tax the finance ministry said it accounted for in forecasts for last month’s budget.
Ireland’s Finance Ministry had forecast in April that state revenues would fall 16% this year due to pandemic disruption. But a strong pre-crisis start to the year, better than expected income tax take since and a surge in corporate tax receipts meant revenues were little changed in the first six months.
Corporate tax, mainly sourced from Ireland’s large foreign multinational sector, has soared in recent years and receipts were up 46% in the first nine months of the year, to keep the decline in overall tax receipts to 3%.
However the state collected just 198 million euros from companies last month compared to the 1 billion euros expected, cutting the increase year-to-date in corporate tax to 11.4%.
Some 275 million euros of that was accounted for by payments the tax authority withheld to fund a new government scheme to compensate businesses most affected by recent strict COVID-19 curbs. Another 275 million euros was also subtracted from gross receipts under the income tax category.
“Excluding the deduction, corporate tax returns are still significantly below those received in October 2019. The shortfall underlines the volatility of returns under this tax head,” the ministry said in a statement.
The department forecast last month that corporate receipts would finish the year 14% ahead of 2019 to hit a fresh record 12.4 billion euros and increase another 3% next year when the overall tax take will rise back above 2019 levels.
Notwithstanding the income tax deduction, the state still collected 23% more income tax than it had anticipated in April, although the ministry cautioned that with a one-month lag in tax collection, increased COVID-19 restrictions would not yet have worked through the system.
“As a result, there remains unprecedented uncertainty in the fiscal outlook,” it said. (Reporting by Padraic Halpin; Editing by Alison Williams)
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