COMMENTARY
If Northern Ireland economy is to take off , we must not lose the Corporation Tax opportunity
Dawn Johnston , Chairperson , Chartered Accountants Ulster Society
W
e near yet another election and the Renewable Heat Incentive has dominated our news , our thoughts and our conversation since before Christmas .
But while that rumbles on , we should remember that the vital legislation which sets out how the Northern Ireland corporation tax regime will operate has been left hanging for nearly two years .
The legislation is there , and getting it there was the hard part . We can all remember the time and effort involved . However it has not yet been enacted and that remains the critical part .
The Northern Ireland rate ( 12.5 per cent ) and date ( 1 April 2018 ) were announced as a key element of the 2015 Fresh Start Agreement . It did , however , come subject to some terms and conditions .
There are clearly defined ratesetting arrangements needed to “ switch on ” the Northern Ireland corporation tax rate . This requires Treasury regulations and some very specific conditions to be met .
The November 2015 Fresh Start agreement stated that one of these conditions was the continued commitment of the Northern Ireland Executive to “ take all the actions necessary to demonstrate that its finances are on a sustainable footing for the long term including successfully implementing measures in the Stormont House Agreement , this Agreement and subsequent reform measures ”.
We don ’ t have an Executive at present and until we do , there will be no Budget for 2017 18 . Northern Ireland cannot “ demonstrate that its finances are on a sustainable footing ” without an Executive in place .
Along with the political system and many other organisations in civil society , Chartered
Accountants Ulster Society and Chartered Accountants Ireland have worked hard for corporation tax devolution .
As an allisland organisation , Chartered Accountants Ireland has seen at first hand the benefits that a low rate of corporation tax can bring .
A low rate of tax is not a giveaway to business or a case of profit before people
It is a measure which stimulates investment by new business and reinvestment by existing businesses . This type of investment brings private sector jobs .
We can all agree that there is an overdependence on the public sector for employment and investment within the local economy . Any measure which helps to rebalance the profile of our economy is urgently needed and should be welcomed .
It will only be through a strengthened economy that we will be in a position to generate the wealth for the much needed reinvestment in our public services – roads , schools , hospitals and infrastructure .
Neither is a reduced rate is all about providing tax breaks for multinationals .
The UK Government has confirmed that the legislation is to be amended so that companies who do not meet the SME employer test can still opt into the regime and obtain the benefit of the Northern Ireland corporation tax rate if it has a Northern Ireland regional establishment .
This proposed amendment will be of most benefit to the indigenous sector .
The current political crisis should not be allowed to jeopardise the efforts that have gone into delivering corporation tax devolution to where it is now .
The prospect that Northern Ireland corporation tax presents should not be allowed to simply pass by as a victim of the current impasse . We cannot allow the opportunity to become a victim of ambivalence toward the political system . It must be seized so that businesses can put plans in place well in advance of the provisional date for the start of the regime next April .
A competitive Corporation Tax rate is one key selling point with which those tasked with attracting inward investment can get their foot in the door with international companies .
It must be made clear by the Northern Ireland Executive that Northern Ireland is a great place to live , a great place to work and a great place in which to do business . A lower rate of corporation tax for Northern Ireland is as vital a tool as ever in Northern Ireland ’ s economic growth toolbox .
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