Northern Ireland to slash corporation tax from 20pc to 12.5pc
It emerged yesterday that political leaders at Stormont have secured a deal as part of the Stormont House Agreement to cut the rate of tax that businesses pay on their profits from 20pc to 12.5pc from 2018. The plan is to help Northern Ireland to compete better for investment and jobs with the Republic of Ireland.
Northern Ireland has been locked into UK inward investment policies that would not allow it to adjust its rates due to a fear of unfair advantage against other regions competing for investment.
In just over two years, Northern Ireland will have a lower tax take on company returns than the rest of the UK.
Despite Northern Ireland’s high corporation tax it has continually landed job creation projects, in the areas of software, customer support, engineering and fintech.
The new corporate tax rate will be a major advantage for Northern Ireland however, critics claim reducing the local rate so significantly from the UK’s would damage public spending, as it would see the Treasury cut an estimated £300m off the Executive’s annual funding from the rest of the UK to offset the loss in revenue. It may also encourage businesses within the UK to relocate.
The tax measure is just one of a number of issues covered in a deal entitled ‘A Fresh Start: the Stormont House Agreement and Implementation Plan,’ the plan is designed to implement the various aspects of the Stormont House Agreement from last December, and to deal with the impact of continued paramilitary activity.
CBI Northern Ireland chairman Colin Walsh said, “This announcement will undoubtedly provide a key ingredient to energise the private sector as well as attracting a new generation of inward investment businesses, thereby creating tens of thousands of new jobs. It will boost prosperity for all, and transform our economic prospects.”
The new agreement puts back the target date for cutting the tax by a year.
