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Political Agreement Paves Way For NI Tax Devolution

by Robert Lee, Tax-News.com, London

25 December 2014


Plans for the devolution of corporation tax powers to the Northern Ireland Assembly took a step forward this week, after leaders of the main political parties reached an agreement on key outstanding issues.

The Stormont House Agreement was concluded on December 23, after 11 weeks of talks on a range of issues. The agreement states that, in view of the progress made, legislation will be introduced as soon as possible after the UK Parliament's Christmas break. The aim is to devolve corporation tax in April 2017.

The Northern Ireland Executive is also examining a wider range of taxes, to consider whether further devolution could result in any clear economic or social benefit for the province. The taxes under consideration include Stamp Duty Land Tax (SDLT) and Landfill Tax, and the Aggregates Levy. In the case of Scotland, SDLT and Landfill tax have already been devolved from the UK Government to the Scottish Parliament.

UK Chancellor George Osborne said earlier this month that the UK Government "recognize[s] the strongly held arguments for devolving corporation tax setting powers to Northern Ireland." At this Autumn Statement, he pledged that, if Northern Ireland is able to provide sufficient reassurances, the UK Government would introduce legislation before the end of the current Parliament, which is to be dissolved in May 2015.

According to the UK Government, the power to set corporation tax rates could be a powerful tool to help the Executive rebalance the Northern Ireland economy, generate sustainable levels of growth, and drive private sector employment. Northern Ireland shares a border with the Republic of Ireland, which levies a 12.5 percent corporation tax rate.

Kevin Kingston, President of the Northern Ireland Chamber of Commerce and Industry (NI Chamber), welcomed the news. He said: "NI Chamber welcomes the fact that an agreement has been reached and that legislation will be introduced as soon as Parliament returns to enable the devolution of corporation tax in April 2017. We encourage the NI Executive to work in parallel on the implementation of key measures to deliver sustainable finances."

TAGS: tax | Ireland | corporation tax | United Kingdom | legislation | tax rates | tax reform | Scotland

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