DUBLIN (Reuters) - Ireland will need to “take great care” in forecasting the trajectory of future corporate tax receipts due to tax changes around the world and in the United States in particular, Finance Minister Paschal Donohoe said on Wednesday.
Ireland’s low 12.5 percent corporate tax rate has long made it a hub for investment from major multinational employers like Google (GOOGL.O) and Facebook (FB.O), and tax receipts for the sector have doubled to record levels over the past five years.
Donohoe’s note of caution followed the U.S. Senate approval on Saturday of a major tax overhaul that could cut the corporate tax rate from 35 percent to 20 percent in what would be the largest change to U.S. tax laws since the 1980s.
“We just need to take great care now in relation to forecasts that we make in the future and in particular changes that are under way in America,” Donohoe told a news conference.
“While we expect the level of corporate tax to be sustainable, we will take care in making judgments regarding the rate of increase in the future.”
Donohoe said both Ireland and the European Union would have to consider in particular how the U.S will view territorial earnings in the future as it tries to understand what kind of impact the changes are going to have.
Ireland’s corporate tax take has swelled from just under 4 billion euros ($4.72 billion) in 2012 to 7.4 billion euros last year and looks set to exceed 8 billion for the first time this year. That has made it the third biggest tax head in the overall code, representing 16 percent of all tax collected.
A government-commissioned report forecast earlier this year that while volatility will remain, the level-shift increase in corporation tax receipts seen most strikingly in 2015 can be expected to continue until 2020.
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Reporting by Padraic Halpin; editing by Mark Heinrich