‘Convincing case’ for reducing corporation tax in North

NORTHERN Ireland may have grounds to reduce its corporation tax rate to the same level or below that of the Republic of Ireland, a committee of British lawmakers said in a report published yesterday.

“There is a convincing case for reducing the corporation tax rate in Northern Ireland, not least so it can better compete with the Republic of Ireland,” the Northern Ireland Affairs Committee, comprised of 14 British lawmakers, found.

Ireland has a 12.5% corporation tax rate, while the rate in Britain, which includes Northern Ireland, stands at 26% after a two percentage-point cut last month.

A reduction in Northern Ireland’s company tax rate has the support of the secretary of state for the region, Owen Paterson, because of the legacy of conflict and its sharing of a land border with the Republic. Paterson launched a consultation paper on the issue and the deadline is June 24.

Any decision on lowering the rate would fall within the remit of the Northern Ireland assembly in Belfast. Scottish First Minister Alex Salmond has said Scotland would push to do the same, albeit keeping a higher rate than Ireland.

“This is a further indication of the way the wind is blowing and a similar move for Scotland is inevitable,” Salmond said in a statement.

Power to vary the tax rate needs to be devolved to Northern Ireland’s 108-seat assembly, company tax raised in the region needs to stay there and the grant given to the province from the government in London would need to decline, Laurence Robertson, who headed the committee, said in the report.

Robertson added that Britain “would have to satisfy the criteria,” for the “tax reduction to satisfy European Union rules on state aids,” the report said.