• Clarity needed on commitment to Corporation tax policy in Northern Ireland says ACCA 

• Northern Ireland businesses can learn from US corporate tax rate changes

• Local businesses need time to plan for re–investment

• Expenditure on reorganisations will usually be allowable against the current tax rate but the extra profits achieved can be taxed at the lower rate  

• Clarity on devolution of corporation tax will support investment decisions within on–going Brexit uncertainty

Businesses in Northern Ireland can learn from the rapid change of the corporate tax system in the US, but they need a commitment by political leaders in Northern Ireland that corporation tax powers will be devolved according to ACCA (the Association of Chartered Certified Accountants).

The professional accountancy body has said that a company needs to plan and set out its business strategy at least two years in advance to maximise the re–investment, expansion and job creation opportunities that a significant change in the corporate tax rate provides, something which US companies were not in a position to do.

Gareth Latimer, Chair ACCA Ulster, said that the issue of corporation tax has fallen off the political agenda and he called on elected representatives to bring more clarity on the issue and enable businesses to plan for the future.  Commenting he said, “If businesses do not have time to plan and conduct due diligence on the areas that will maximise return on any new funding opportunities, many will not invest in the areas that support long–term sustainability and growth.  However, for local businesses to implement their plans they need to know if and when corporation tax will be devolved.   

“Based on their current financial standing businesses typically consider areas for re–investment at least two years in advance and if there is any potential for the devolution of corporation tax by 2021 Northern Ireland companies should be considering their areas of reinvestment now, to obtain the full benefit from planned reductions,”

 “Good financial planning is integral to that process. Expenditure now on reorganisation and efficiency measures will mostly be allowable against the current tax rate of 19% but the extra profits achieved from the reinvestment may only be taxed at 12.5% when the policy is introduced.  A reduction in the corporation tax rate will also have an impact on the amount paid on deferred tax in the future and certainty within this process will support businesses’ long term financial investments plans.”

Chas Roy Chowdhury, Head of Taxation at ACCA added that the influence of both national and international changes in tax systems, including the US, was reinforcing the need for commitments on the ring–fenced policy in Northern Ireland to be implemented.  He said, “The impact that certainty on the timing of this process will have on businesses is something that has been overlooked.  It will enable them to conduct the required research and put their investment plans in place and with the added challenges that Brexit has brought, medium term financial planning has never been more important to Northern Ireland business.  We need to take the politics out of tax and get the rate reduction date in the diary now so that it can help alleviate Brexit uncertainty and costs.”

ENDS