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Northern Ireland 'future-proofed' against abuse of low corporation tax rate

By Rachel Martin

Published 24/11/2016

Invest NI chief executive Alistair Hamilton
Invest NI chief executive Alistair Hamilton

Invest NI chief executive Alastair Hamilton has claimed companies are showing interest in setting up in Northern Ireland on the basis of its looming lower rate of corporation tax.

Addressing MLAs at Stormont's economy committee, Mr Hamilton said the region was "future-proofed" against businesses that might try and misuse the lower tax rate.

He added that even if World Trade Organisation tariffs were imposed in the aftermath of a withdrawal from the EU, the benefit of a reduction in corporation tax would greatly outweigh any tariff costs.

"We still have a very strong appetite for the corporation tax proposal," Mr Hamilton explained. "We've a strong message out there - the one thing I asked for was a rate and a date, and we've got a rate and a date."

The move to devolve corporation tax powers will see the rate drop from 20% to 12.5% in April 2018 for companies in which at least 75% of costs are generated in Northern Ireland.

Mr Hamilton also dismissed concerns that shifting global politics would have an impact investment here.

US President-elect Donald Trump has indicated he intends to cut the US corporate tax rate from 35% to 15%.

But Mr Hamilton said the tax landscape was moving fast, with momentum now gathering strongly against base erosion and profit shifting (BEPS) - strategies that aim to exploit loopholes in tax rules to shift profits to reduced or no-tax locations.

"Companies are having to normalise their tax arrangements within the next two years, and we have already had a lot of interest in Northern Ireland," he added.

"We are having a lot of companies talking to us either by design or by accident. In Northern Ireland, we are already BEPS future-proofed. Only those transactions carried out within Northern Ireland will be able to avail of the 12.5% tax rate. There is no second step there - never."

Responding to suggestions the region could lose out on investment to UK neighbours, Mr Hamilton said Northern Ireland's selling point was "skills-related and cost-centred".

"I think we are in a better position than some of our neighbours around us," he explained.

His comment came as delegates from Invest NI spent their last day in Abu Dhabi and Dubai on a trade mission.

Meanwhile, MLAs were told of the "strong performance" in investment over the past five years, with £3bn worth of job-related cash ploughed into the economy - £590m of which was in research and development.

Some 87 international investors have also set up shop here, and Northern Ireland is the only UK region to experience growth in exports over the past year. Committee chairman and Sinn Fein MLA Conor Murphy called the figures "impressive".

Belfast Telegraph

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