North eyes corporation tax change

NORTHERN Ireland could soon have the power to set its own corporation tax rate which could result in firms leaving the Republic to locate in the North.

Ireland’s corporation tax rate of 12.5% is one of the lowest in Europe and a major selling point in attracting firms to locate here. Traditionally Northern Ireland maintained the same rate as Britain, which ranges from 21% to 28%.

However, the newly appointed Northern Ireland secretary, Owen Paterson, said yesterday that he is “very enthusiastic” about pursuing the idea of allowing Stormont to set its own corporation tax rate.

In the run-up to the election the Tory party made a promise to produce a government paper on the mechanics of giving the North the power to lower or raise corporation tax.

Mr Paterson said evidence gathered from the Republic is “absolutely overwhelming”.

“In the time that the Republic of Ireland cut corporation tax in a very dramatic manner, it so increased revenues that it increased spending on public services by 220%,” he said.

In the run-up to the British election, Conservative Party leader and now Prime Minister David Cameron said he would turn Northern Ireland into an “enterprise zone”.

This he said would include changing the corporation tax rate in the province to encourage more inward investment.

He said he wanted to grow the size of the private sector in the North to create new jobs and investment.

Meanwhile Chartered Accountants Ireland said Ireland’s corporation tax rate is not under threat following a European ruling.

It said it has noted the EU Commission communication on Reinforcing Economic Policy Co-ordination but in their view, there is nothing in the communication which could prejudice the corporation tax rate in Ireland.

Director of Taxation Brian Keegan said: “Chartered Accountants Ireland monitors on an ongoing basis developments in EU tax policy and strategy to assess its potential impact on Ireland. In fact, only last week we were in bi-lateral discussions in Brussels with the EU Tax Commissioner Algirdas Semeta concerning corporation tax policy. Commissioner Semeta was very clear that the corporation tax rate is entirely an issue for national governments.”