The Government is set to receive a pre-budget boost to the public finances after signals from the Department of Finance that corporation tax returns will beat already elevated forecasts for this year and in 2027.
The improving outlook may yet increase scope for new spending and tax measures for Budget 2027 next month. But there is concern within the Coalition about the potential for the new figures to stir political pressure to increase the €8.5 billion budget package.
Increasing corporation tax revenues have strengthened the public finances but they have led to a cascade of warnings that the State’s reliance on money from a small number of large companies is very risky.
Receipts from the tax have more than doubled since 2020, with three companies – Apple, Eli Lilly and Microsoft – accounting for almost half the total return in 2025.
Confidential figures prepared for meetings this week between Taoiseach Micheál Martin and Tánaiste Simon Harris suggest 2026 receipts from the tax on business profits will exceed the Department’s €35.3 billion April forecast by a wide margin.
The eventual 2026 return will be baked into the 2027 forecast, prompting signals that the projected €37.4 billion return next year will also be eclipsed.
The new figures have been described as “highly sensitive” because of ongoing budget discussions within the Cabinet. Still, two people with knowledge of the talks said the likely return from the tax has improved appreciably.
The €8.5 billion package under discussion for weeks embraces €7 billion in additional spending and €1.5 billion in tax cuts.
The expectation of an increased corporation tax return is based on an early assessment of payments into the exchequer since the start of September and an appraisal of returns in the first eight months of the year.
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The Department of Finance declined to comment. Official forecasts from the department have not been updated since its “annual progress report” in April, which projected a €2.3 billion or 7.1 per cent increase in corporation tax receipts in 2026.
Corporation tax returns to the end of August were already up by 8.3 per cent on 2025, climbing €1.4 billion to reach €17.8 billion. The return in the first eight months of the year includes €1.2 billion from the new 15 per cent “top-up tax” for large companies, with further increases expected in coming months.
A new forecast from the department will not be unveiled until budget day – October 6th – but Government officials are working on the basis that corporation tax projections for 2026 and 2027 will be revised upwards.
“Strong corporation tax receipts in September are likely the result of final top-up payments for companies with a 31st December 2025 year-end,” said Peter Vale, head of Republic of Ireland tax at accountants Grant Thornton.
“However, they could also signal positive projections for companies with year-ends in early 2027. The latter would be an early positive indicator for 2027 corporation tax receipts.”
The department’s April forecast was based on projections of increased corporate profitability and the expected impact of the 15 per cent rate, which was assumed then to generate an additional €3 billion in corporation tax this year.
The likelihood of the 15 per cent rate delivering a bigger return is said to be one the main factors behind the new projections but not the only one.
“Looking further down the line, Ireland will continue to collect additional tax receipts from the 15 per cent global minimum tax regime,” Vale said.
“The expiry of intellectual property-related tax allowances will also boost receipts in future years, on the assumption that there is no significant migration of intellectual property from Ireland.”