As published on belfasttelegraph.co.uk, Thursday 11 March, 2021.
Northern Ireland could lower its tax rate to attract post-Brexit business from the Republic and Britain, AIB’s chief economist has said.
Oliver Mangan said Northern Ireland’s unique access to both the EU and UK markets could make it a “real competitor” for the Republic of Ireland.
“Certainly, if Northern Ireland were to have a look at its corporation tax rate and opt for a lower rate – keep the rate at 18% or go even lower – and it has unfettered access to the UK and EU single markets, it would become a very attractive destination for foreign direct investment and certainly a real competitor to the South,” Mr Mangan told a webinar this week.
After the 2015 Fresh Start political deal, Northern Ireland pledged to lower its corporate tax to 12.5%, in line with the Republic’s, but it has yet to do so.
But UK chancellor Rishi Sunak announced last week that the UK’s overall corporation tax would rise from 19% to 25%, starting from 2023.
“That will make it a lot less attractive destination for foreign direct investment,” said Mr Mangan.
The UK’s unilateral decision to extend grace periods on British exports to Northern Ireland has caused a rift with the EU and led to uncertainty about the application of the 2019 Brexit protocol that governs trade between the two islands.
At a joint event organised by the Newry and Dundalk chambers of commerce, Taoiseach Micheál Martin said the protocol provides “real opportunities” for Northern Ireland.
“There are real opportunities for Northern Ireland in its implementation, with access to Great Britain but also to 450 million European Union consumers,” said Mr Martin.
“As we all adjust to the new trading circumstances, every effort will need to be made within the framework of the protocol to meet and resolve challenges. It is in all of our interest to make it work as well as possible.”
Northern Ireland’s finance minister Conor Murphy, a Sinn Féin MLA, said that both sides should work through their differences on the protocol “in a mature way”.
He said US investors, in particular, were looking to Northern Ireland as a place to do business.
"If we continue to major on the difficulties that we’re facing, then those people will sit back and say that this isn’t somewhere to come and invest.”