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Daily Business Post
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By Jack Horgan-Jones
Senior Stormont politicians are planning to take the wraps off a hyper-low 10 per cent corporate tax rate scheme which would undercut the Irish corporate tax rate during a charm offensive aimed at top US companies around the St Patrick’s day bank holiday.
High profile meetings to push the North’s new rate cutting powers with executives at US companies is planned, with First Minister Peter Robinson and enterprise, trade and investment minister Arlene Foster leading the change for 10 per cent. The plan to cut the corporate tax rate to a level 2.5 per cent below the rate available in the Republic is being championed by Democratic Unionist Party ministers, and is understood to enjoy the support of prominent figures in the leadership. The 10 per cent plan is facing opposition from Sinn Fein MLAs, although DUP sources indicated that they remain hopeful that their counter party will sign up to the plan.
They are hopeful that Sinn Fein Deputy First Minister Martin McGuinness will take part in the US trip to sell the new corporate tax rate. Sinn Fein have made it clear that they favour a tax closer to the Republic’s at 12.5 per cent. The legalisation which will clear the way for the Stormont assembly to drop its corporate tax rate is currently working its way through the British houses of Parliament “We’re getting the power, we might as well make use of it.” said a DUP source.
Tax experts said the under-cutting of the Irish corporate tax rate would present a challenge for inward investment, although some maintained that an improved foreign direct investment offering from the North would ultimately benefit the whole island. Andrew Webb, a Belfast economist and FDI expert with OCO Global, said that the North’s inward investment offering would be significantly strengthened if the DUP pull off the ultra-low rate. “The last great differentiator between North and South in the race for FDI was corporation tax. It brings us to a level of parity,” he said. While much detail around the implementation of a rate cut needs to be clarified, he said that a new rate will form a core part of the North’s investment pitch.
“The potential upside benefits are so positive that if Invest NI and the government aren’t selling in to the investor market place, they should be within weeks” he said. Dublin based Grant Thornton partner Peter Vale said “It would be a competitive offering and a threat to Ireland, but there is a benefit to the island as a whole in terms of overall having a competitive outlook”. Chartered Accountants Ireland taxation director Brian Keegan urged the Stormont executive to “sign up to an agreed rate effective from an agreed date if this incentive is to work”. IDA Ireland welcomed the idea of the North cutting its rate, saying that it believes Ireland can compete across a range of criterion, including corporate tax.
