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  3. Northern Ireland To Levy 12.5 Percent CIT From 2018

Northern Ireland To Levy 12.5 Percent CIT From 2018

by Robert Lee,, London

18 November 2015

The Northern Ireland Executive and the UK and Irish governments have agreed a set of actions to secure the full implementation of the Stormont House Agreement, paving the way for the devolution of corporate tax powers to the Northern Ireland Assembly from 2018.

The settlement, "A Fresh Start. The Stormont Agreement and Implementation Plan," was reached on November 17. The Stormont House Agreement was concluded in December 2014. It provides for the devolution of corporate tax powers, the introduction of welfare reforms, and the resolution of outstanding issues relating to Northern Ireland's past. Legislation to transfer the necessary corporate tax powers was passed by the UK parliament earlier this year, but implementation was stalled after talks between Northern Ireland's power-sharing parties broke down.

The aim had been to apply a new Northern Ireland rate from April 2017. As part of the new settlement, the Executive has committed to a commencement date of April 2018. It will set the rate at 12.5 percent, in line with that applied by the neighboring Republic of Ireland.

The UK rate is 20 percent. It will fall to 19 percent in 2017 and 18 percent in 2020.

The settlement document states that the Northern Ireland Executive is "committed to an affordable and more competitive corporation tax rate," as a means for "rebalancing the economy and addressing the social and economic challenges facing Northern Ireland."

"In this context the Executive attaches importance, on the basis of fairness and proportionality, to Northern Ireland bearing the full costs and receiving the full benefits of the devolution of corporation tax consistent with the Azores criteria [European Union principles on state aid]. In accordance with the requirements of the Stormont House Agreement, the Executive reaffirms its commitment to take all the actions necessary to demonstrate that its finances are on a sustainable footing for the long term, including successfully implementing measures in the Stormont House Agreement, this Agreement, and subsequent reform measures," it added.

Commenting on the announcement, Stephen McCully, the President of Northern Ireland Chamber of Commerce and Industry (NI Chamber), said: "NI Chamber welcomes the fact that the political deadlock has been broken. Political stability and a Northern Ireland Executive pulling together on the economy is vital for business growth in Northern Ireland."

"The agreement will pave the way for the devolution of corporation tax powers by April 2018. Although it is disappointing that this will be a year later than first anticipated, the rate has now been firmly set at 12.5 percent. It means that with a rate and date now in place, businesses can plan for growth and Invest NI can start selling the proposition to potential inward investors across the world. The delay caused by the impasse has impacted negatively on business confidence but it is hoped that it will not have an impact on proposed foreign direct investment projects."

TAGS: tax | investment | business | Ireland | corporation tax | United Kingdom | tax rates | tax reform | trade association | trade | European Union (EU) | Europe

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