Northern Ireland could stand out in the race for foreign direct investment if it opts to lower its corporation tax rate from 2023, it has been claimed.
Chancellor Rishi Sunak announced an increase in the main rate of corporation tax from 19% to 25% from 2023 in the Budget - a move that would leave our tax rate double that of the Republic.
But business advisory firm KPMG said if Northern Ireland exercises a power to set its own rate of tax and chooses to level with the Republic, that would leave the region an attractive place for investment when combined with its dual-market status under the NI Protocol.
KPMG partner in charge Johnny Hanna said the Executive will only be able to use the power if a compelling cost-benefit analysis can be shown. However, having the same tax rate as the Republic "would significantly enhance the attractiveness of NI".
The Executive was granted the power to set its own corporation tax rate in 2015. Mr Hanna said that the corporation tax increase to 25% for companies with profits of £250,000 or over was necessary to balance public finances following spending during the pandemic. He said: "This provides NI with an opportunity. Leveraging the power to set corporation tax would give this region a competitive edge over the rest of the UK and many other major economies and would also level the business tax playing field on the island.
"Add to that the unique position - as a gateway to both GB and Europe - which NI currently enjoys post-Brexit, and the draw for international investment becomes compelling."
However, the Protocol granting the dual market access has angered unionists, unhappy at new trade barriers with GB.
In the Assembly yesterday, SDLP South Belfast MLA Matthew O'Toole quoted from the website of Invest NI, which states that the Protocol it presented a "unique position for manufacturers in NI, as well as those seeking a pivotal location from which to service GB and EU markets".
Asked by Mr O'Toole if she disagreed with the statements, Economy Minister Diane Dodds said he had pointed out "what an absolutely brilliant place NI is to invest in and to do business in... But it will be even better when we do away with the friction of the Protocol."