The announcement last week by the Department of Finance that up to €2 billion of this year’s corporate tax haul would not be repeated in 2023 combined with a spate of tech job losses — first Stripe, then Twitter, while Facebook’s parent Meta and Intel are expected to announce layoffs soon — highlight Ireland’s exposure to Big Tech.
The stories are not unconnected as a significant chunk of Ireland’s corporate tax revenue — it’s expected to be close to €20 billion this year — comes from a small group of multinationals in the tech sector. And that area now appears to be the first domino to fall in a global economic slowdown.
Corporate tax elite
Publishing its latest monthly exchequer returns last week, showing that corporate tax receipts had again surged to record levels, with €16.2 billion collected in the year to October (€6.6 billion ahead of the same period in 2021), the department matter-of-factly stated that €2 billion would not be repeated without providing any further details.
Might this be another manifestation of the tech reversal? It’s impossible to tell. The identities of Ireland’s corporate tax elite are a closely guarded secret. A €2 billion reversal in the context of €20 billion windfall wouldn’t spell disaster and corporate tax tends to surprise on the upside. But a pronounced downturn in tech could pose real difficulties for Ireland.
We’ve got so used to tech companies announcing bigger and bigger investments and job hire plans that the current reversal has caught us by surprise and it seems many Twitter employees also.
The sector has been at the forefront of global growth and Ireland’s recovery from the 2008 financial crash. Even through the pandemic, these firms doubled down on investment as earnings soared on the back of increased levels of digitisation. However, there have been warnings, particularly in stock market circles that many of these firms are overvalued. A correction had been on the cards even before the current cost-of-living squeeze.