The extra-ordinary tax payments of US MNCs in Ireland

The US tax collector, the Internal Revenue Service (IRS), has been publishing aggregate data from the country-by-country reports US MNCs have been filing with them.  The data is available here and the most recent year covered is 2018.

Here are a few categories from the 2018 data with the countries ranked by the amount of cash payments made for corporate income taxes to each of them.  The top 15 are shown.

As would be expected, the United States itself is the largest recipient of corporate taxes from US MNCs.  Of the $261.5 billion of cash payments for income taxes made by US MNCs in the IRS country-by-country statistics just over $140 billion (53 per cent) was paid to the US.

Next on the list is the UK which was the recipient of $10.9 billion of corporate tax payments from the US MNCs in this data.  And extraordinarily, Ireland is next.  The IRS statistics show that US MNCs paid close on $8 billion of Corporation Tax in Ireland in 2018.  This figure is likely to be higher when the IRS updates its data with subsequent years.

Ireland is the third-highest recipient of corporate taxes from US MNCs in the world.  The scale of the payments being made here is highlighted when they are put in terms of national income.  Here they are put in terms of Gross National Income (for countries with a GNI of more than $100 billion) with the highest 30 countries shown.

The $8 billion of tax paid by US MNCs in Ireland in 2018 was equivalent to 2.6 per cent of Ireland’s Gross National Income (if GNI* is used it moves above 3.0 per cent).  No country with a GNI of more than $100 billion comes close to collecting this amount of tax from US MNCs as a share of its national income. 

The are some smaller countries where the share in Ireland is apparently eclipsed.  These are the Cayman Islands($213 million of tax from US MNCs, 6.9 per cent of GNI), Bermuda ($485m, 6.5%), The Bahamas ($516m, 4.2%) and Luxembourg ($1,398m, 3.1%).  However, these are small payments relative to very small economies and is not clear if the tax payments attributed to US MNCs subsidiaries in those countries are made to those countries.  The GNI of the Cayman Islands is around $3 billion which is 100 times smaller than Ireland and it does not have a corporate income tax from which revenue can be generated.

It is worth noting that the US itself in included in the above chart.  In 2018, the corporate tax revenue from US MNCs in Ireland as a share of GNI was nearly four times higher than it was in the United States.

Tweet