Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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288. To ask the Minister for Finance his views on the fall in corporate tax revenue in December 2016 as a result of a particularly large rebate reported at €150 million to a single company; and if he will make a statement on the matter. [1609/17]

Michael Noonan (Limerick City, Fine Gael)
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December 2016 corporation tax receipts came in below expectations by just over €250 million. However, it is important to view these receipts in conjunction with the overall corporation tax receipts for 2016, which were very strong. Corporation tax receipts closed 2016 €737 million or 11.1 per cent above target, representing an annual increase of 7.0 per cent. In relation to the under-performance in December, a contributing factor was a large repayment of c. €150 million, scheduled for October 2016, which was delayed and subsequently paid in December.

As the Deputy will appreciate, corporation tax refunds and one-off payments are a normal feature of our tax system, which subsequently increases the difficulty in forecasting this tax-head. While my Department liaises very closely with Revenue's Large Cases Division, which plays a key role in formulating forecasts, corporation tax remains difficult to forecast, due to various company specific and other idiosyncratic reasons.

There are a number of reasons why a company may be entitled to a refund of corporation tax paid. For example, large companies are required to make preliminary tax payments in the sixth and eleventh months of their accounting period. The preliminary tax payments are determined either with reference to the company's liability in the previous accounting period, or based on the anticipated liability of the current accounting period. The actual liability, determined after the end of the accounting period, may be lower than the preliminary tax payments thus resulting in an overpayment of tax. This could occur where a company's profits are lower than initially forecast.

Secondly, sections 766 and 766A of the Taxes Consolidation Act 1997 provide for a tax credit in respect of qualifying expenditure on Research & Development (R&D). The R&D tax credit must be initially used to reduce the corporation tax liability of the company for the accounting period in which the relevant expenditure is incurred. Any unused amount may be carried forward and used to reduce the corporation tax liability of subsequent accounting periods. However, where an excess remains, instead of carrying forward that excess, a company may claim to use it to reduce the corporation tax liability of the preceding accounting period. If any excess still remains it may still be carried forward and used to reduce the corporation tax liability of succeeding accounting periods. In the event that there is no corporation tax liability in the current year, the company may claim to have the amount of that excess paid to them by the Revenue Commissioners in 3 instalments over a period of 33 months from the end of the accounting period in which the expenditure was incurred.

Thirdly, where a company incurs a trading loss, section 396A of the Taxes Consolidation Act 1997, allows for this loss to be carried back to the previous accounting period. As the company would have already paid its liability for the earlier accounting period, such a situation would result in the company being entitled to a refund in respect of that loss.

Finally, circumstances such as company restructurings, mergers and acquisitions, as well disposals of subsidies, amongst others, can result in changes to corporation tax liabilities.

I am advised by the Revenue Commissioners that higher-than-profiled repayments in December contributed to the shortfall in corporation tax receipts in that month. For reasons of taxpayer confidentiality, Revenue is unable to provide further details. However, it should be noted that, as outlined above, repayments are a normal part of the functioning of the tax system and occur throughout the year. As indicated in their report on Corporation Tax receipts in 2015, , repayments of Corporation Tax totalled around €800 million in 2015 and levels are expected to be similar in 2016. Revenue will publish a detailed 2016 analysis in due course.