Possible tax move signals North may soon be more competitive

NORTHERN Ireland could soon be in a position to better challenge the Republic for foreign direct investment after the potential for lowering its rate of corporation tax was raised in yesterday’s emergency British budget.

The main British rate is currently 28% – more than double that of the Republic’s – but will gradually come down to 24% over the next three years. While no change to the North’s 30% rate for overseas companies has been granted as yet, the British Government is to publish a consultation paper into the matter in the autumn.

Such a measure for Northern Ireland has been welcomed by companies there. Brian Lavery, managing director of the Belfast office of property consultants, CB Richard Ellis, said it “ would enable us to compete more effectively with the Republic for investment and job creation”.

Meanwhile, increases in the main VAT rate and capital gains tax (CGT), ushered in by yesterday’s emergency budget, are likely to spell good news for the Irish economy.

As expected, new British Chancellor George Osborne included a rise from 17.5% to 20% in the main VAT rate and changed the CGT rate, for higher taxpayers from 18% to 28%. The latter shift could spell good news for NAMA, given that €22bn of the €81bn property loans it’s buying are based in Britain (with €5bn located in Northern Ireland).

The rise in VAT brings Britain much closer to Ireland’s 21% and is expected to bring a more level playing field to cross-border trade, something welcomed by the likes of the IBEC-affiliated Retail Ireland, Chambers Ireland and the Association of Chartered Certified Accountants.

Meanwhile, Irish drinks group C&C saw its share price rise by almost 2% to €3.34, as an original plan to increase duty on cider was reversed.