DUBLIN (Reuters) -Most of Ireland’s big corporate taxpayers have so far escaped the direct impact of U.S. tariffs, but American trade policies have made the outlook for this critical source of government revenue increasingly uncertain, Ireland’s fiscal watchdog said.
Irish corporate tax receipts, paid mainly by a small number of U.S. multinationals, have jumped sevenfold since 2014 to account for close to one third of all taxes collected and transform the public finances.
The Irish Fiscal Advisory Council (IFAC) noted on Wednesday that the pharmaceutical and technology sectors, which together represent about 87% of corporate tax payments from U.S.-owned firms, had avoided U.S. tariffs so far.
PHARMA EXPORTS SURGED AHEAD OF EXPECTED TARIFFS
In fact, the watchdog said pharmaceutical exports to the U.S. had benefitted from frontloading, with Ireland’s shipments exceeding the record total for all of 2024 by April, as companies moved to stay ahead of potential trade barriers.
It added that the data also pointed to a structural increase in exports of an active ingredient used in weight-loss drugs, boosting short-term corporate tax receipts.
However, IFAC warned the sector’s outlook remained “very uncertain”.
Risks include the long-term objective of the tariffs to encourage more pharma manufacturing in the United States.
“Multiple forces are at play, from potential tariffs and drug price reforms to new blockbuster drugs and buoyant underlying demand. Each could have an influence on the value of Ireland’s pharma exports to the U.S. and, hence, Ireland’s corporation tax receipts,” the watchdog said.
“Corporation tax revenues from pharma could go up by a lot or down by a lot.”
While there is a clear risk corporate tax could decline in other manufacturing sectors such as drinks and medical devices likely to be directly affected by tariffs, they accounted for just 4% of Irish corporate revenues in 2024, IFAC added.
(Reporting by Padraic HalpinEditing by Mark Potter)
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