THE lack of a Stormont Executive is compounding the pressures of increased tax bills and continued high inflation on businesses, according to Chartered Accountants Ireland.
And the body insists that the potential for lower rate of corporation tax in Northern Ireland “should not be forgotten”.
The CAI, which represents 5,200 members in the north, more than two thirds of whom work in business, was commenting as new higher corporation tax rates became operational - they've risen from 19 per cent to 25 per cent for companies with taxable profits of more than £250,000.
Its public affairs director Dr Brian Keegan said: “Many companies in Northern Ireland are facing a tax bill which is double that of their counterparts in Ireland, which ultimately means even lower after-tax profits and less cash to invest, drive company growth, and reward employees.
“Yet despite this, Northern Ireland companies have a number of unique opportunities to mitigate against this increase which should not be ignored. The potential for a lower corporation tax rate to match the rate in Ireland is just one opportunity.
“A lower rate of corporation tax would put Northern Ireland in a strong position to attract FDI, particularly in the manufacturing and distribution sectors, and would drive investment and expansion by local companies, leading to the creation of more high-value jobs and improved wage offerings.”
Last May, the Fiscal Commission’s final report set out the economic benefits to be achieved from a lower rate whilst also recognising the risks and complexities which would need to be managed.
Dr Keegan added: “We agree with the Commission’s analysis of these economic benefits, which also flagged the constructive engagement required from both the Executive and HM Treasury to activate a Northern Ireland corporation tax rate.
“Without an Executive in place, this work simply cannot begin leaving Northern Ireland companies at the mercy of a further squeeze on their cash resources.”
Zara Duffy, head of Northern Ireland at CAI, said: “Northern Ireland companies and businesses are already capitalising on their unique access to the EU’s single market for goods under the Protocol, and from September improved access to the UK’s internal market will also be available under the Windsor Framework via the new green channel arrangements.
“A recent survey of our members identified the Windsor Framework as a significant opportunity. But companies need an Executive in place in order to seize this opportunity and ensure the revised trading arrangements are implemented in a way that supports businesses.
“The higher corporation tax bill which many companies are facing is just one of a myriad of issues in dire need of attention. But those major challenges in health, education and the economy cannot be addressed unless our Executive gets back to work.”
She added: “The milestone 25th anniversary of the Good Friday Agreement should be grasped. Northern Ireland needs its political leaders to work together for the benefit of the whole region.”
