The Parliamentary Budget Office (PBO) has published a report which provides an analysis of corporation tax revenue growth. The report highlights the risks affecting corporation tax, including concentration risk, volatility risk and the implications of international tax reforms. It also discusses tax windfalls, transfer pricing, and places Ireland’s corporation tax yield in an international context.
The report notes that corporation tax revenue is heavily reliant on the foreign direct investment (FDI) sector. Changes in the business operations or tax strategies of those that contribute the most would have significant impact on Ireland’s fiscal health.
Failure to adequately address Ireland’s infrastructural capacity constraints in relation to housing, utilities and transport could impact FDI. The report recommends strategic policy decisions to enhance Ireland’s competitiveness in non-tax areas such as infrastructure to mitigate the systemic risks associated with our corporation tax receipts.