Northern Ireland’s economy could be supercharged if the executive took responsibility for setting its own corporate tax rate.
That’s the message from the body that represents accountants in Northern Ireland, which said a lower corporate tax rate would attract investment from abroad and help local businesses grow.
Chartered Accountants Ireland has said the executive must act now to ensure Northern Ireland is in a good position when UK corporate tax drops from its current level of 19% to 25% in 2023.
Corporate tax setting powers have already been vested in Stormont but have yet to be launched by the executive, largely because it is expected to make up any shortfall for Westminster through the block grant .
Decentralization was granted after a long campaign to give Northern Ireland the flexibility it needed to compete with its closest neighbor to the Republic where corporate tax only stands at 12.5 %, a level which has proved to be stimulating for its economy.
Although the Republic has committed to raising this rate to 15% as part of a comprehensive reform aimed at setting a minimum corporate tax rate, it would still make sense that Northern Ireland had the power to reduce its rate at a more competitive level, provided he can prove he is able to use the powers “sustainably”, according to a report by the Independent Tax Commission of Northern Ireland.
“The Commission is of the opinion that corporate tax should be delegated to the North
Ireland, ”the report says. “However, we also believe that, given the complexities, both technical and political, there is no value in the NI executive simply asking it again.
“He will have to demonstrate how he would use the powers and how he would balance his budget. It would have to demonstrate the “sustainability” of its finances. He should work with the UK government on these issues. “
Chartered Accountants Ireland said devolved corporate tax powers would enhance Northern Ireland’s current economic advantage under the Northern Ireland Protocol, where it has access to the Kingdom’s markets United and the European Union.
“We believe that FDI will be the main driver in Northern Ireland’s quest for economic prosperity, but the commitment of the Northern Ireland Assembly to improving an appropriate business environment will be key to this success,” said Paul Henry, chairman of Chartered Accountants Ireland. “A study conducted last week by the Institute for Economic and Social Research (ESRI) on trade between Ireland and Northern Ireland suggested that if a minimum overall corporate tax rate of 15% was introduced, this could increase the number of FDI projects going to Northern Ireland by 7.5%. per year.
“This is further proof of the potential that a lower and competitive corporate tax rate could bring to the region.”