Wednesday, July 3, 2024

CT receipts go gangbusters - again

Can we really keep saying that? We might have expected an increase in June but the outturn was exceptionally strong.  For a single month, the €5.9 billion collected in June is second only to the €6.3 billion collected last November.  

As shown below, June 2024 was by far the largest June on record.

Of course, as we discussed earlier, the June receipts are also a pointer to what might happen in November.  Here’s what happens if we extend the June/November relationship for the outturn we have just seen for June 2024: a fitted value for November 2024 of €8.2 billion – which alone would be equivalent to the entire amount of CT collected in 2017.

The strong June means that 2024 is now considerably higher than 2023.  In the first six months of 2024 €12.2 billion of CT has been collected.  On its own this would be the fourth-highest full year ever – and there are still six months to go.

It is pretty likely now that the sequence of calendar year CT receipts exceeding the previous year will be extended to 13 years (back to 2012).

The June outturn was enough to push the rolling 12-month sum up to a new high of €25.5 billion.


The next month of interest will be August when we will see how much the fruit harvest brings in.

The continuing elevated levels of Ireland's Corporate Tax receipts

Ireland’s Corporation Tax revenues have been at an elevated level for some time. For the past 18 months their 12-month rolling sum has hovered around €24 billion, with little more than volatility causing it to move slightly up and down.
There is no clear recent trend, but the chart of calendar year outturns could be set for another year with an annual increase. It is 2011 since the amount of Corporation Tax collected in a year was lower than the preceding year. Here are the outturns since 2014, with the line for each subsequent year being higher than the last.
2024 did slip slightly behind 2023 in March and April, but this was made up by a strong May. The month receipts in May 2024 of €3.6 billion were the highest May on record.
May is a significant month for CT receipts but it is not generally a useful pointer for receipts for the year as a whole. May is month 11 for companies with an end-June year-end so has greater links with December of the previous year (month 6 for such companies). June is both a significant month for CT and a pointer for receipts for the year as a whole. June is month 6 for companies with an December year end, with November being month 11 for them. Large companies pay the bulk of their Corporate Tax in two preliminary payments during the year. These payments are made in month 6 and month 11 of the companies’ financial years. Here are the monthly receipts for June and November (and a fitted line) since 2009. The relationship is clear.
What will June 2024 bring? It is hard to know. As set out at the beginning the fluctuations in CT have been due to the volatility that can be expected in such a concentrated series (the top 10 payers account for more than 50 per cent of total CT receipts). The year-on-year monthly comparisons are pretty wide. Obviously, most of them have been positive in recent years, but certainly not all. There have been months where the amount collected was significantly down on the same month in the previous year. But this has typically not been those months that are important for CT – such as May, June and November (though other months such as March and August are starting to join them).
And we can see above that the range of changes has been a bit lower over the past 18 months or so. All-in-all, it probably points to June 2024 being relatively close to June 2023, maybe +/- 10 percent, which in turn points to yet another high return in November. And if there is to be a surprise, it may be on the upside.

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