Lower corporation tax sees investors head south
The Republic’s low rate of corporation tax may have led to 21 international companies setting up there instead of Northern Ireland, Enterprise Minister Arlene Foster said.
The Minister divulged the number of businesses which put down roots in the Republic after preliminary advances to Invest NI in a written answer in the Northern Ireland Assembly.
Sinn Fein MLA Paul Butler had asked how many foreign companies who had discussed opening in the province with Invest NI later located in the Republic due to its lower rate of corporation tax over the past five years.
The Treasury is set to publish a report on the feasibility of a lower corporation tax rate for Northern Ireland.
Arlene Foster said: “Of the companies that have engaged with Invest NI and visited Northern Ireland in the last five financial years, 21 companies have subsequently invested in the Republic of Ireland.
“Where possible, Invest NI attempts to establish the reasons for the decision taken by the investors. However, companies are not always open about the reasons for choosing one location over another as these decisions are often commercially sensitive.
“The location of inward investment projects is determined by the company’s operational needs and a number of other factors. Corporation tax may be one of a number of factors. Skills availability, infrastructure and cost and availability of property are all shown to play a part.”
Its 12.5% rate of corporation tax was credited with attracting numerous overseas companies to invest in the Republic, helping create the decade-long economic boom known as the Celtic Tiger.
The UK and Northern Ireland has a headline corporation tax rate of 28% which is set to be cut by 1% every year until it reaches 24%.
The Department of Enterprise, Trade and Investment said: “One element of Northern Ireland’s proposition in attracting inward investment is that it is cost competitive in comparison to other western European locations.”
In February the Northern Ireland Economic Reform Group, an independent panel of senior economists, accountants and business leaders, launched a report giving the case for a reduced rate of corporation tax. But Finance Minister Sammy Wilson said the report was “simplistic” and that any cut would have to be funded by public spending cuts.
A report three years ago by former HM Revenue chief Sir David Varney dismissed the case for a cut, saying it would cost £300m in lost tax receipts and displace existing businesses from the rest of the UK.