Back in 2015, Parliament passed the Corporation Tax (Northern Ireland) Act to devolve corporation tax rate setting powers to the Northern Ireland Assembly. The government’s manifesto promise here reiterates the commitment to follow through this transfer of power, but only once the Northern Ireland Executive can demonstrate that its finances are on a sustainable footing.
The Northern Ireland Executive had publicly stated its intention for the regime to begin in April 2018, with the tax rate being set at 12.5% (the same as in the Republic of Ireland), in a bid to drive investment and trigger economic growth. It was heralded as a major changer for the Northern Ireland economy.
However, since then the Northern Ireland Executive collapsed in January 2017 (over a botched green energy scheme) with talks still ongoing to restore it. Until it is restored, therefore, this power cannot be devolved any time soon as there is no Executive to demonstrate fiscal stability!
The government has not repealed or replaced the Corporation Tax Act, so they can still claim they are keeping to their manifesto promise as long as they don’t repeal the Act itself. For this reason we are marking it as ‘in progress’.
- Research Briefing: Corporation tax in Northern Ireland – Parliament.uk