DUBLIN: Northern Ireland’s finance minister has put the estimated cost of the planned reduction in the corporation tax rate to 12.5% from the current UK-wide 20% rate at around £500m over three years.
Finance minister Máirtín Ó Muilleoir provided the figures in a written answer to a question in the Norther Ireland Assembly about the cost of bring the rate in line with the currently lower rate in the Republic of Ireland.
In his answer he stated: ‘The latest estimate we have from the Treasury of the net cost of a 12.5% rate to the executive is £270m in 2020-21, with this falling to around £235m in 2021-22.
These estimates were calculated following the British government’s 2016 Budget and reflect policy changes announced at that time. Any further reductions to the UK rate of corporation tax would be expected to reduce these estimated costs.’
In the immediate aftermath of the UK’s referendum to leave the EU, then Chancellor George Osborne indicated corporation tax rates could be cut as low as 15% in a bid to encourage foreign investment in the UK, but such a move has not been endorsed by his successor, Philip Hammond.
In a statement to parliament, Hammond said ‘when we look at the corporate tax environment, we will not just be looking at headline rates.’ In answer to a separate parliamentary question about Northern Ireland’s tax plans post-Brexit, Ó Muilleoir said: ‘The executive has made clear its desire to achieve a rate of corporation tax of 12.5% by 2018.
Clearly the outcome of the EU referendum changes the context within which we are working and, in light of that, I will bring a report to the executive which sets out how best to secure the right outcome for our economy, our budget and our people.
‘As finance minister I remain committed to the devolution of corporation tax powers.’ However, Ó Muilleoir admitted that the costs for devolving corporation tax powers to the North have not been agreed with the British government and said that ‘engagement on this and other related issues continues’.
