Irish tax take 2.5 percent ahead of target at end of July

DUBLIN, Aug 3 (Reuters) - Ireland (Other OTC: IRLD - news) collected 2.5 percent more tax than expected in the year to the end of July, the finance ministry said on Wednesday, but the outperformance deteriorated significantly over the last two months.

Ireland had taken in 4.3 percent more tax revenue than expected at the end of May, but the ministry had warned some large unexpected payments were driving the increase and were likely to unwind.

Tax for the month of July was 98 million euros ($110 million) below expectations, primarily due to underperformance in value-added tax receipts. Corporate tax income was also below expectations in July, but remained ahead of target for the year to date.

The government has said it expects its tax take to be 2 percent higher than forecast by the end of the year.

Finance Minister Michael Noonan has said the potential collateral damage from Britain's vote to leave the European Union will not derail his plans to further increase spending and cut taxes next year.

Ireland had a fiscal surplus of 862 million euros over the first seven months after government spending came in 0.4 percent lower than expected. Ireland has forecast that its deficit will fall to 0.9 percent of gross domestic product (GDP) this year.

The economy is forecast to grow faster than any other in Europe for the third straight year in 2016. But the government cut the forecast for 2017 GDP growth to about 3.4 percent from 3.9 percent and warned of worse ahead if Britain strikes an unfavourable Brexit deal with the EU. (Reporting by Conor Humphries; Editing by Louise Ireland)