All over Britain, there are stories of Companies becoming impatient with the UK tax regime and looking to relocate elsewhere. The Treasury is well aware of this and overtures of better times ahead have been made to the business community. True to his word, Mr. Osborne announced, at the end of November, that a new 10p rate for corporation tax would be introduced on profits generated from new products generated and developed in Britain. In the Telegraph today, it was announced that Corporation tax would fall from 28% to 25% in next year’s budget.
However, the Treasury needs time (perhaps at least 5 years) before they are able to lower the tax overall down to 12.5% as currently charged in the Republic of Ireland.
The Treasury’s promise may not be enough for some Companies. That is why Northern Ireland is in an ideal position to do Britain a great favour. If a company is absolutely determined to “up sticks” then Northern Ireland will be able to welcome these relocating businesses with open arms. This coincides with doubts that Ireland will be able to hold on to its low tax rate for much longer.
As reported in the Belfast Telegraph, Northern Ireland politicians have been handed a Government paper on devolving Corporation Tax.
The only question is, what will the Northern Ireland politicians do? Will they take this extraordinary opportunity?
Northern Irish politicians will have to find savings of about £450m in order to take an equivalent cut from the block grant to avoid illegality in the European Courts.
Only one thing is certain. As a winning policy for Northern Ireland, it is a complete “no brainer.”