Taxation: Corporation Tax

House of Lords written question – answered on 30th March 2006.

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Photo of Lord Kilclooney Lord Kilclooney Crossbench

asked Her Majesty's Government:

What is the estimated loss of revenue to HM Exchequer if corporation tax rates were reduced in Northern Ireland from 30 per cent to 12.5 per cent.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

The information is not available to estimate the loss of revenue if corporation tax rates were reduced in Northern Ireland.

The corporation tax regime is a UK-wide system and to introduce different rates in different parts of the UK could distort competition. Many companies trade in different regions of the UK. It would not be easy to determine which proportion of their profits were liable at which rate. In addition, such a measure could also create opportunities for some companies to manipulate the rules simply to benefit from a lower rate. This would result in a system that would place a significant administrative burden on both businesses and the Government.

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