As part of the Stormont House Agreement, the government has introduced the Corporation Tax (Northern Ireland) Bill to devolve powers to set the rate of corporation tax in Northern Ireland to the Northern Ireland Assembly. The devolved rate will apply to trading profits only, and primarily to micro-, small- or medium-sized enterprises for whom at least 75% of their staff time and costs relate to work in Northern Ireland. It will apply to large companies and corporate partners to the extent that profits are attributable to a Northern Ireland trading presence. The intention is for the Bill to receive royal assent before the general election in May and for the new powers to take effect in April 2017.
The current rate paid by businesses in Northern Ireland is 21%, compared to 12.5% in the Republic of Ireland. According to the government, if the rate were lowered, around 34,000 businesses in Northern Ireland would stand to benefit, including 26,500 SMEs. The Bill, which had its first reading in the UK Parliament on 8 January 2015, will allow the Northern Ireland Assembly to set the rate by resolution, and new rules will be inserted into CTA 2010 to provide for identification of the profits chargeable at the Northern Ireland rate, which will include a separate regime for large companies and SMEs.
In addition, as the CIOT reports, parts of CTA 2009, CTA 2010 and CAA 2001 will be amended to facilitate a potential rate differential, including: amendments to revalue Northern Irish trading losses used to relieve profits arising in the UK main rate regime; to determine which credits and debits on intangible fixed assets are within the NI regime; and how to compute amounts related to capital allowances and other reliefs (including but not restricted to creative industry reliefs, patent box and research and development).
Theresa Villiers, Secretary of State for Northern Ireland, said she was ‘delighted’ by the move, adding: ‘Given the land border shared with a lower corporation tax jurisdiction, this measure has the potential to create thousands of new jobs and stimulate crucial growth in Northern Ireland’s private sector, leading to a stronger, re-balanced economy. In the light of an economy that for many years has been over-dependent on the public sector, allowing the Assembly to set its own rate for corporation tax offers the prospect of a transformative change in Northern Ireland. The Bill is subject to the important conditions … but it is fair and balanced and provides the opportunity to build a brighter future for Northern Ireland.’
As part of the Stormont House Agreement, the government has introduced the Corporation Tax (Northern Ireland) Bill to devolve powers to set the rate of corporation tax in Northern Ireland to the Northern Ireland Assembly. The devolved rate will apply to trading profits only, and primarily to micro-, small- or medium-sized enterprises for whom at least 75% of their staff time and costs relate to work in Northern Ireland. It will apply to large companies and corporate partners to the extent that profits are attributable to a Northern Ireland trading presence. The intention is for the Bill to receive royal assent before the general election in May and for the new powers to take effect in April 2017.
The current rate paid by businesses in Northern Ireland is 21%, compared to 12.5% in the Republic of Ireland. According to the government, if the rate were lowered, around 34,000 businesses in Northern Ireland would stand to benefit, including 26,500 SMEs. The Bill, which had its first reading in the UK Parliament on 8 January 2015, will allow the Northern Ireland Assembly to set the rate by resolution, and new rules will be inserted into CTA 2010 to provide for identification of the profits chargeable at the Northern Ireland rate, which will include a separate regime for large companies and SMEs.
In addition, as the CIOT reports, parts of CTA 2009, CTA 2010 and CAA 2001 will be amended to facilitate a potential rate differential, including: amendments to revalue Northern Irish trading losses used to relieve profits arising in the UK main rate regime; to determine which credits and debits on intangible fixed assets are within the NI regime; and how to compute amounts related to capital allowances and other reliefs (including but not restricted to creative industry reliefs, patent box and research and development).
Theresa Villiers, Secretary of State for Northern Ireland, said she was ‘delighted’ by the move, adding: ‘Given the land border shared with a lower corporation tax jurisdiction, this measure has the potential to create thousands of new jobs and stimulate crucial growth in Northern Ireland’s private sector, leading to a stronger, re-balanced economy. In the light of an economy that for many years has been over-dependent on the public sector, allowing the Assembly to set its own rate for corporation tax offers the prospect of a transformative change in Northern Ireland. The Bill is subject to the important conditions … but it is fair and balanced and provides the opportunity to build a brighter future for Northern Ireland.’
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