Northern Ireland inches closer to corporation tax devolution
23rd March 2015 | News
The House of Lords last week voted in favour of the devolution of corporation tax to Northern Ireland, but stated it will not become law until controversial welfare reforms have been approved by Stormont.
At the turn of the New Year, Westminster announced plans to devolve corporation tax setting powers to Northern Ireland, as part of its commitments to the Stormont House Agreement.
With corporation tax rates set at 21 per cent in the UK and firms in the Republic of Ireland paying 12.5 per cent, the Stormont government will be given the ability to reduce rates in Northern Ireland in a bid to maintain competitiveness and encourage investment in new and growing companies.
It is hoped by slashing corporation tax in Northern Ireland that more than 40,000 new jobs would be created, increasing output by up to 10 per cent.
Theresa Villiers, secretary of state for Northern Ireland, insists welfare reform must remain at the top of the agenda in order for Stormont to receive corporation tax-setting powers.
“The new tax-setting powers will only be commenced if the executive parties put their finances on a long-term sustainable footing.
“Changes to the welfare system are a key part of this. I hope the parties will continue to work hard to resolve current issues and ensure this enormous opportunity is not lost.”
As part of the mooted legislation, Northern Ireland will be allowed to set its own rate of corporation tax from April 2017.
Small and medium-sized enterprises (SMEs), in which at least three-quarters of staff time and costs relate to work carried out in Northern Ireland, will qualify.
Larger businesses, such as multi-national companies, will need to be a Northern Ireland Regional Establishment (NIRE) – with a fixed place of business in Northern Ireland.
Stormont hopes to pass the devolution into law ahead of May’s general election.
Image: John Connell