The amount of money the state is collecting in taxes is on the rise, a report into the tax department’s activities released by the audit office on Monday said, with a total of €6.9 billion euros worth of tax revenue being collected last year.

That figure is a significant increase from the €4.6bn collected in 2021, with the report finding that the amount of tax money collected by the tax department increased by 18 per cent in 2022, 14 per cent in 2023, and 12 per cent in 2024.

However, the report did point out that the state had accumulated arrears of revenue – money which due to the government but which has not been collected – amounting to €3.1bn by the end of 2023, with around €1.4bn of that said to be “at risk of not being collected”.

This, the audit office said, is the case “mainly due to the failure of the tax department to take effective measures in a timely manner to collect tax debts”.

It said that in addition, the tax department had failed to conduct “substantial audits” of companies which owed money, “possibly to the detriment of revenues”.

“In several cases, the imposition of taxation by the tax department was carried out outside the six- or twelve-year period which allows the tax department to impose additional tax,” it said.

It added that it had pointed out to the tax department that companies which “may be considered high risk” should “not remain unaudited for years on end”.

These companies, it said, include companies related to the construction industry, land development companies, companies with histories of significant financial losses, or companies with “disproportionate expenses” in relation to their revenues.

The report also highlighted the department’s “inability to identify the non-submission of income tax returns”, saying that more than 50 per cent of a sample study of legal entities and 30 per cent of a sample of people either did not submit income tax returns for two or more years in a row, or submitted them late.

“It also appears that the possibility provided by the legislation for the department to impose taxes based on the judgment of the commissioner within a specified timeframe is not being utilised,” it said, saying that this has resulted in “a loss of revenue for the state”.

In addition, the report made reference to the issue of overpayments, saying that a total of €15.4m was collected “due to incorrect registration of data during tax payments” by taxpayers themselves.

While €11.1m of that figure was treated by the department as “direct tax revenue”, €4.3m was recorded as “other revenue”, with the report pointing out that this effectively creates an accounting error within the tax department as the €4.3m is thus counted as income.