Northern Ireland is considering its own corporation tax following the budget

Northern Ireland is setting up a tax commission which could allow companies to escape a rise in the rate of corporation tax which would be twice that of the Republic of Ireland.

The province was granted delegated powers to set its own corporate tax rate through the Fresh Start Agreement in 2015. This prompted major political parties to pledge to lower its rate to 12.5%, in accordance to the Republic. However, these efforts diminished when the UK reduced its own corporate tax rate to 19%.

Asked if his department was considering setting a regional rate so businesses in the province don’t pay the 25 per cent level imposed on the UK’s most profitable businesses from 2023, Conor Murphy, Minister for Northern Ireland Finance said: “I intend to establish shortly a tax commission to review the various taxing powers of the executive. Its report will provide a comprehensive picture of the costs and benefits of further fiscal decentralization measures.

Northern Ireland business groups, which have campaigned for the province to come closer to the Republic’s corporate tax rate, have expressed dismay at the increase announced by Chancellor Rishi Sunak in the budget of Wednesday.

“It’s a huge potential risk,” said Matt McCullough, director of Belfast-based HannawayCA Corporate Finance, who said he had already received calls from clients about the potential fallout and whether it would be better to move. in the Republic because of the inferior society. tax rate.

“It is important that the business community pull together and work with politicians to mitigate these risks,” he added. “We’ve had a few decades of progress in Northern Ireland that could just cross the border.”

Darragh McCarthy, director of the Belfast Chamber and chief executive of FinTrU, a fintech which employs nearly 750 people in Northern Ireland, said the tax hike, coming amid fallout from Brexit, “would raise questions about investments and future location” for businesses in the Province.

In the hours after Wednesday’s budget, the Northern Ireland arm of the employers’ group, the CBI, said concerns about higher tax rates were “particularly acute” for its members. He now asks members how they will be affected before engaging with decision makers.

“The Fresh Start deal has committed the NI executive to reducing the corporate tax rate to 12.5%, so this is an issue that will require much more attention as we think about economic growth ahead. regionally,” said Angela McGowan, the CBI’s director for Northern Ireland.

A senior official at the Northern Ireland trade body said that while its members would like a cut in the corporate tax rate, such an outcome was unlikely as the reduction in revenue would ultimately have to be covered by lower spending and the pandemic has made people hate to cut resources for health or education.

“I have no idea this executive is going to prioritize the economy [over health and education],” he said.