Taxation: Corporation Taxation
House of Lords

Photo of Lord Empey

Lord Empey (UUP)

To ask Her Majesty's Government what representations they have received from the Northern Ireland Executive with regard to the devolution of corporation tax-levying powers to the Northern Ireland Assembly.

To ask Her Majesty's Government when they will make a decision on the proposals to devolve corporation tax-levying powers to the Northern Ireland Assembly.

To ask Her Majesty's Government what representations they have received from the government of the Republic of Ireland about the proposal to devolve corporation tax-levying powers to the Northern Ireland Assembly.

To ask Her Majesty's Government what discussions they have had with the European Commission about the proposal to devolve corporation tax-levying powers to the Northern Ireland Assembly.

To ask Her Majesty's Government whether they have established a figure for the annual yield of corporation tax from Northern Ireland; and, if so, what that figure is for the last three financial years.

Photo of Lord Sassoon

Lord Sassoon (Conservative)

The Government published a consultation document Rebalancing the Northern Ireland Economy on 24 March 2011. This considered a number of options, including the potential to devolve corporation tax rate setting powers to the Northern Ireland Executive.

Estimates of the annual yield of corporation tax for Northern Ireland were included in paragraph 4.35 of this document. The value of corporation tax receipts in Northern Ireland in 2009-10 is estimated at around £465 million. As set out in the consultation document, the analysis implies that Northern Ireland corporation tax receipts excluding North Sea oil and gas, and also excluding branches, varied between 1.3 per cent and 1.6 per cent of UK corporation tax receipts between 2002-03 and 2007-08, broadly averaging 1.5 per cent. In 2008-09, the Northern Ireland tax base dipped to 1.1 per cent of UK corporation tax receipts.

As would be normal for policy development, officials have had informal contact with the Commission, which suggests that it should be possible to design a state aids compliant system.

The Government have subsequently announced the establishment of a joint ministerial working group, comprising ministers of the Her Majesty's Government and the Northern Ireland Executive to consider issues raised by the consultation.

A comprehensive programme of work has been agreed, aimed at examining in greater detail issues relating to the potential devolution to the Northern Ireland Assembly of powers to vary the rate of corporation tax.

This includes further work on: the potential costs to the Northern Ireland block grant of a reduction in corporation tax beyond those estimates already published in the consultation document; and the need to ensure that any proposal to devolve corporation tax powers is compliant with the Azores judgment of the European Court of Justice. The Secretary of State for Northern Ireland has discussed this ongoing work with colleagues in the Irish Government.

No decision has yet been made on whether to devolve corporation tax. A decision will be taken following the conclusion of work developed by the joint ministerial working group, which is expected in the summer.

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