Amid global economic turbulence and increasing competition for foreign direct investment (FDI), Northern Ireland holds a unique position with dual access to both the UK and EU markets. However, Chartered Accountants Ireland warns that this perceived advantage is being undermined by a corporation tax rate that is currently double that of the Republic of Ireland.
Pamela McCreedy, President of Chartered Accountants Ireland said: “In a turbulent trading environment, Northern Ireland is in the enviable position of benefiting from unfettered access to both the UK and EU markets. No other economy can boast this. If the enormous potential that dual market access offers is to be fully realised, then it must be supported by complementary industrial policies that further boost the region’s attractiveness, including a more competitive rate of corporation tax.
The policy paper outlines a clear case for reform:
• 60% of Chartered Accountants in Northern Ireland support devolving corporation tax powers to the Northern Ireland Executive.
• A reduced rate would make the region more attractive to investors, help create high-value jobs, and level the playing field with neighbouring jurisdictions.
• Lessons from the Republic of Ireland’s longstanding 12.5% rate demonstrate the potential for sustained revenue growth over time.
• Research published by the Economic and Social Research Institute in Ireland found that if a 15% minimum corporation tax rate were introduced in NI, this “would increase the number of high-value FDI going to Northern Ireland by 7.5% per annum.”
• In terms of implementing the rate without impacting Northern Ireland’s block grant, the paper suggests it could be feasible to replace any reduction in the block grant brought about by the lower rate with a special low-interest loan from the UK Government. The ultimate ambition behind the launch of a reduced rate of corporation tax is that it will become self-funding in the medium to long term.
The paper proposes implementing a Northern Ireland-specific rate—potentially 12.5%—with protections for larger companies subject to the OECD’s 15% minimum. Crucially, it recommends securing a long-term guarantee on the rate for at least twenty years to provide certainty to investors. To safeguard public finances, the paper calls for negotiations with HM Treasury to mitigate any short-term impact on the block grant through measures such as a special low-interest loan. This approach has been backed by the Independent Fiscal Commission and leading tax experts across the region.
Pictured at the launch of the Enhancing our Competitiveness paper in Belfast are Zara Duffyand Cróna Clohisey of Chartered Accountants Ireland; and Mark Lawther, Chairman, Chartered Accountants Ulster Society.
The paper is available at https://bit.ly/Enhancing25