Lower UK corporation tax rate will hit Northern Ireland hard, warns top accountant
Plans to lower the UK's corporation tax rate will "dilute" the impact of a lower rate in Northern Ireland, a top accountant has warned.
As part of the summer Budget, Chancellor George Osborne announced that the rate for the UK will drop to 17% - the lowest of any G20 country, by 2020.
Caroline Keenan, tax director at one of the island's largest professional accounting and management consultancy firms said the chancellor's decision would make it harder for Northern Ireland to compete to attract top firms.
Speaking on BBC Radio Ulster, Ms Keenan said: "I don't think it's a good move, from the point of view that it dilutes the potential that we have.
"We're going to be competing with England, Scotland and Wales and, that differential, I don't think it's even going to cut it."
The Northern Ireland Executive was granted permission to drop the rate of corporation tax from 20% to 12.5% to match the rate in the Republic of Ireland.
Power to set corporation tax here had been granted to the Executive as a sweetener to encourage the main political parties to sign up to the 'Fresh Start' in November. The agreement was the result of almost 10 weeks of negotiations at Stormont brought in to end the political crisis here at a time when relations in the devolved government had hit a critical point.
Corporation tax is paid on profits from doing business as a limited company, by any foreign company with a UK branch or office, a club, co-operative or other association, for example community groups and sports clubs. Companies not based in the UK but with an office or branch here, only pay corporation tax on profits from their UK activities.
The UK rate had sat at 20% for profits below £300,000 for the last three years. A slightly higher rate must be paid on any money made above £300,000.
It was previously thought that lowering the rate of corporation tax in Northern Ireland could cost the Executive here between £200m and £300m in money it would have to pay back to Westminster from its block grant.
Despite being welcomed by many business leaders, the move to lower the rate to 17% has been branded "aggressive" by the director of the Oxford University Centre for Business Taxation. He warned it could cost around £2.5bn by 2020-21 in lost tax revenue.