The Institute’s comments come as the Fiscal Commission publishes its interim report, stating that there is a case for devolving corporation tax powers to the Northern Ireland Assembly and urges the NI Executive to develop its own plans to demonstrate the sustainability of its finances.
Earlier this year, Chartered Accountants Ireland, which represents over 5,000 members in Northern Ireland appeared in front of the Commission and renewed its call for the activation of devolved powers for the Northern Ireland Assembly to set its own corporation tax rate. 2 in 3 Chartered Accountants surveyed in Northern Ireland are in favour of the region acting on the legislation which is already in place.
Commenting, Paul Henry, President, Chartered Accountants Ireland said:
“The interim report from the Fiscal Commission notes the opportunity to improve economic performance in Northern Ireland but also highlights the political and technical complexities of corporation tax devolution. The Institute has long supported the consideration of a devolved rate of corporation tax in the region, particularly in light of the impending increase in the UK’s rate of corporation tax from 19% to 25% from April 2023.
“Devolution of corporation tax is already legislated for in the UK Parliament but hasn’t been commenced. A clear and credible statement of intent from the NI Executive on how devolved powers would be used as well as meaningful engagement with HM Treasury on the block grant and borrowing powers is needed in order to move this forward. The complexities of activating corporation tax devolution are not new but now is the time to act and take a fresh look at how the Northern Ireland economy can level up by implementing a lower corporation tax rate in a way that minimises the cost to the block grant and addresses the well known complexities of this issue.
“Northern Ireland has lower levels of income and investment compared to the rest of the UK and we believe that allowing the Northern Ireland Assembly to set a lower rate would enable the region to attract increased high-value FDI, drive investment and expansion by local companies and allow Northern Ireland to take further advantage of its position under the Protocol with free access to both EU and UK markets. The recommendation from the Commission today is a clear signal of the benefits to be achieved and should be acted upon.”
Northern Ireland has established itself as an attractive location for FDI and is home to more than 1,100 international companies, in some of the world’s fastest growing and innovative industries. The Institute believes that with the correct infrastructure and tax policy, there is significant potential for further investment in the region.
Mr Henry continued:
“We believe that FDI will be the key driver of Northern Ireland’s quest for economic prosperity, however commitment from the Northern Ireland Assembly to enhance a suitable business environment will be critical for this success. Research by the Economic and Social Research Institute (ESRI) last week on trade between Ireland and Northern Ireland suggested that if a global 15% minimum corporation tax rate were introduced, it could increase the number of FDI projects going to Northern Ireland by 7.5% per annum. This is further evidence of the potential a lower, competitive rate of corporation tax could bring to the region.”
Paul Henry, President of Chartered Accountants Ireland
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