ICAI recommends that North lowers taxes

THE Institute of Chartered Accounts has formally submitted a call for the reduction of corporation tax in the North to the review of tax policy ordered by new British prime minister Gordon Brown when he was chancellor of the exchequer.

The institute said it had written to David Varney — the former head of the Inland Revenue who is carrying out the review — calling for a 12.5% rate like that in the Irish Republic instead of the British top rate of 30%.

The detailed submission followed a meeting with the Varney team last month.

The ICAI said it noted the current high level of international goodwill towards the province and suggested: “This goodwill can be transformed into foreign direct investment if the economy is characterised by self sufficiency.”

It added: “A low corporation tax rate is key to attracting foreign direct investment.”

In the submission the body rejected criticisms that a low corporation tax rate encouraged tax avoidance and resulted in artificial tax planning.

It contained an analysis of how such pitfalls had been avoided successfully in the Republic, where business has enjoyed low corporation tax for several years.

The submission also offered a roadmap of how a lower rate could be introduced without contravening the EU Treaty.