Accountancy Body Calls For More Competitive Rate Of Corporation Tax

A new report compiled by Chartered Accountants Ireland, entitled ‘Enhancing Our Competitiveness’, has called for a swift reduction in the rate of corporation tax to help businesses in Northern Ireland be more competitive. They believe that this would increase investment, drive economic growth and create countless new jobs across the region.

The fact that Northern Ireland has the enviable attraction of having its foot in the UK and EU trading markets, with dual access to them both, should be driving the economy forward, but the accountancy body claim that the high rates of corporation tax here are badly hindering many businesses from growing further. Business in NI are paying twice as much corporation tax as businesses in the Republic of Ireland which does seem grossly unfair.

Dual Market Access Must Be Supported By Complementary Industrial Policies

Here is what Pamela McCreedy, President of Chartered Accountants Ireland is quoted as saying about this situation, as copied from an article on the Business Eye website. She 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.

“Our message is clear: Northern Ireland cannot afford to stand still. A competitive corporation tax rate is essential to bolster our investment proposition and unlock the full potential of Northern Ireland’s dual-market access.

“This report calls on our policymakers to take bold action. By embracing fiscal reforms that align Northern Ireland’s tax policy with its economic ambitions, we can foster an environment that attracts investment, nurtures entrepreneurship, and secures a prosperous future for generations to come.”

Main Points Of The Report

Here are the main points from the report, again copied from the Business Eye article. They are:

• ·       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 long-standing 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.

Who knows if this call from Chartered Accountants Ireland will be listened to and action taken. But if a reduced rate of corporation tax were introduced there is no doubt a real resurgence could be on the cards.