Top 10 companies now pay more than half of corporate tax

The Government's dependence on large multinationals for tax revenue intensified further as a result of the impact of Covid-19 last year, with the top 10 companies now contributing more than half of all corporation tax receipts for the first time.

New figures published by the Revenue Commissioners show the 10 largest payers contributed 51 per cent of corporation tax last year compared with 40 per cent in 2019 – their highest ever level.

Between them, these companies, which would include groups such as Apple, Pfizer and Intel, paid net corporation tax of €5.98 billion in 2020 – up from €3.79 billion the previous year.

Just 100 companies account for almost 80 per cent of all revenue from corporation tax, according to the latest figures. A total of 137 businesses paid in excess of €10 million each in corporation tax last year.

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The exchequer’s growing reliance on foreign multinationals is also evident by the fact that they now account for 32 per cent of all jobs in the Republic as well as contributing 49 per cent of all employment taxes with a value of €13.4 billion. The respective percentages in 2019 were 27 and 44.

Ireland’s foreign multinationals – which amount to just over 14,500, according to the Revenue Commissioners – have about 766,800 employees.

The latest figures highlighting Ireland's reliance on the foreign multinational sector comes as the European Commission has signalled it will seek reform of corporation tax from the Government as a condition for the release of Ireland's share of €750 billion in Covid-19 economic recovery funding.

In addition, the administration of US president Joe Biden has recently proposed a minimum global corporation tax rate.

Corporation tax accounted for 21 per cent of all taxes collected by Revenue in 2020 – up two percentage points on the previous year. It remains the exchequer's third-largest source of tax revenue.

Small businesses

However, Revenue figures show that corporation tax payments from small businesses slumped by 40 cent in 2020 to €594 million with the sector badly affected by the pandemic despite a number of support initiatives such as the Temporary Wage Subsidy Scheme

In contrast, corporation tax paid by both Irish-owned and foreign multinationals firms rose by 18 per cent over the same period to €10.3 billion.

Revenue said many large corporate taxpayers had actually benefited from Covid-19 through greater demand for things like pharmaceuticals and certain IT products.

According to calculations by Revenue, the effective rate of corporation tax paid by all companies in 2019 was 10.3 per cent compared with the standard rate of 12.5 per cent. The effective rate for foreign multinationals was 11.1 per cent.

The effective rate is derived from allowing for various tax reliefs, credits and deductions.