The Governor of the Central Bank has warned that Ireland is overly dependent on corporation tax and that the tax base needs to be broadened.
Gabriel Makhlouf will soon be writing his annual letter to the Minister for Finance in advance of the Budget.
Speaking on RTÉ's News at One, he said he will likely say that the "ongoing concentration risk that we carry ... needs to be managed. I’ve said this to him before and to his predecessors".
"Essentially we need to broaden our tax base," he said.
He said multinationals have contributed a great deal, in terms of tax and employment, but that the Government "is now just slightly too reliant on a small number of corporates paying a large amount of tax".
The Central Bank's latest Financial Stability Review says Ireland's financial system is "starting from a position of strength, but that resilience must be protected".
It also notes that Government finances "remain strong, but there are underlying vulnerabilities" - including that budget surpluses "depend on corporation tax revenues".
Without this revenue, the Central Bank says the budget balance is "projected to remain in deficit, leaving the State exposed if the global economy weakens or multinational activity is affected".
The Central Bank has also warned that global risks to the Irish financial system arising from the Middle East conflict, artificial intelligence (AI), and cyber attacks have intensified.
The regulator highlighted several economic threats, led by a "persistent global energy supply shock triggered by the conflict in the Middle East".
According to the review, if that situation "intensifies or continues for longer, it will push up inflation, slow economic growth and increase costs for Irish households and businesses".
It also notes that Ireland's dependence on imported energy and international trade means the country is "particularly exposed" to global developments.
Mr Makhlouf said the worsening geo-political situation is the risk he is most concerned about, because "we have no control over it".
Meanwhile, the Central Bank says valuations in the AI sector have "reached high levels", noting an "increasing amount of investment in the sector funded by debt".
So far for 2026, the level of debt finance for AI is already higher than any previous full year.
The regulator warns that any reassessment of the sector could have "wider economic effects".
"Depending where the money is being borrowed from there would be reactions by lenders and somewhere along the line people would probably suffer loses," said Mr Makhlouf.
"Because of the nature of the funding it is relatively opaque and we're not sure where the loses would land."
Regulators, he said, worry about a lack of transparency.
While it would not hit Ireland directly, he said it is about "the systemic impact of something like this happening in the US how would it feed through the wider economy".
The Central Bank review also said that rapid developments in AI also raise concerns over the facilitation of cyber attacks.
The Governor said that "preserving resilience is so critical right now," which includes strong capital buffers in banks, prudent lending standards, and robust operational defences.
