Corporation tax cut essential to unlock Northern Ireland’s dual market access

The UK government has already sanctioned the devolution of corporation tax setting powers to the Northern Ireland Executive, powers which if finally implemented would allow it to reduce the tax rate to 12.5% (15% in the case of certain large companies), on a par with our nearest neighbours in Republic of Ireland.

But little has been done to progress the devolution of corporation tax-setting powers to Stormont since the move was granted by Westminster a decade ago and then lauded far and wide in subsequent months around the world.

It is unlikely the then First and Deputy First Ministers and others who attended a landmark meeting in KPMG’s New York office in March 2016 would have expected that progress on the issue would be so achingly slow. There was great momentum and energy in the room that day for the prospect of a special 12.5% tax rate, a message which the delegation presented in front of potential New York investors and would then take to the same in San Francisco.

Nearly a decade on and little has changed, but it is essential we get that momentum back.

The arguments in favour of a lower corporation tax rate are as strong today as they were over a decade ago.

It would help to rebalance the local economy; improve the competitiveness of our investment proposition and ensure that leading Northern Ireland indigenous businesses are incentivised to invest and reinvest in the region.

It remains the only revenue raising measure over the medium-to-long term with the potential to deliver the fiscal overhaul so badly needed.

I would like to see the conversation finally move to the ‘How’ to make it happen, that is by seeking agreement from Treasury on a form of innovative long-term funding that would ensure no immediate and unpalatable hit to the region’s block grant allocation.

In addition, a dynamic modelling approach could be facilitated to help capture not just the incremental corporation tax from new investments in Northern Ireland, but also the incremental secondary benefits, such as additional income taxes, VAT and others.

We need to move away from the unhelpful narrative around this being a “tax cut” which we can’t afford, to one that describes what this is: a significant revenue raising measure which we cannot afford not to do.

Much has been made of Northern Ireland’s unique dual market access in recent years but it is clear that it will have little impact if it isn’t accompanied by another economic lever of some merit.

Cutting corporation tax is that lever. It has been granted by Westminster, it has a proposed funding model, it has the backing of business both locally and globally and, most pertinently, it has been proven to boost economic growth and increase productivity.

Inaction on corporation tax is stymying the Northern Ireland economy.

The time to act is now.

This article originally appeared in The Irish News on 18 March 2025 and is reproduced here with their kind permission.