SMEs fear NI cut in corporation tax rate

Two-fifths of Irish SMEs are concerned that a mooted reduction in the Northern Irish rate of corporation tax would have a negative impact on the economy south of the border.

Legislation introduced in Westminster in January to devolve control of the rate to Stormont is expected to pass before the UK general election next month.

Up to 34,000 Northern Irish businesses are set to benefit from the proposed reduction which is likely to come into effect in 2017.

The deal, which is expected to see the current 21% corporate tax rate fall in line with the Republic’s 12.5%, was heralded as a transformative move for the Northern economy.

The development has caused some concern among business leaders here with more than 40% of SMEs expressing concern over the potential ramifications of increased competition, according to Close Brothers’ quarterly business barometer.

Having power to set their own rate is likely to create thousands of jobs north of the border and force businesses here to raise their game, Adrian Madden of Close Brothers Commercial Finance said.

“However, according to our research, 41% of those surveyed in the Republic say that they are concerned Ireland may face increased competition for foreign investment as a result of the decision.