25/04/22

IRELAND: UK move to 25% corporation tax ‘will lure even more investors to the Republic’.

As published on belfasttelegraph.co.uk, Monday 25 April, 2022.

Northern Ireland risks losing out more than ever to the Republic from next year when corporation tax becomes double that of our neighbour, it has been claimed.

The Republic’s historic low-tax policy of charging just 12.5% has helped lure huge companies like TikTok, Google, Apple and Facebook to set up over the border.

Northern Ireland has lost out as a result and discussions over lowering our corporation tax have not resulted in action.

From April next year, the main rate of corporation tax in the UK will increase from 19% to 25%. The EU and OECD have looked at changing rules so that a minimum rate of 15% would apply.

Ross Boyd, director of RB+ Chartered Accountants, said the UK’s move to a 25% rate will make Northern Ireland a less attractive spot when compared to the Republic.

In addition, the Republic retained its full membership of the EU, which is another selling point. However, Northern Ireland remains within the single market for goods, under the terms of the Protocol.

Mr Boyd said: “Northern Ireland’s corporation tax rate will increase for businesses generating profits over £250,000 to 25% in April 2023, in line with the UK’s rate. By comparison, the Republic’s effective rate for profits up to €750m is 12.5%, which by this time next year, will equate to half of our rate here in Northern Ireland.

“This could make Northern Ireland seem a relatively unattractive investment location for potential businesses looking to establish a UK and or EU base. Maintaining a low corporate tax burden and securing access to the EU single market will ultimately remain key drivers for foreign direct investment. Unfortunately for Northern Ireland, our neighbour offers both.”

Mr Boyd said that lost opportunities for investment could hinder economic growth.

According to the Department for International Trade, foreign direct investment projects here created 2,351 new jobs in 2019-20.

Mr Boyd said factors in the Republic such as higher income tax could work against it. The cost of living is also much higher over the border.

He added: “This is something that will have to be assessed on a case-by-case basis, but a corporation tax rate that is half that of Northern Ireland’s may ultimately encourage investors to gravitate towards the Republic.”

He urged businesses in Northern Ireland to begin preparations for the new tax regime as soon as possible.

“My advice to local businesses would be to reassess your business structure both within the UK and EU to ensure that you get the best rates available,” Mr Boyd said.

"Updated structures may be quite different and you will need to implement a quality business plan and use good financial management to get the most from these changes.

“With soaring inflation and a new era of supply chain insecurity, businesses need to plan more carefully than ever.”