Commentary

A1.551 Tax powers in Northern Ireland

Administration and compliance

A1.551 Tax powers in Northern Ireland

A1.551 Tax powers in Northern Ireland

The Corporation Tax (Northern Ireland) Bill was published in January 2015 and received Royal Assent on 26 March 2015. It devolves the power to set the rate of corporation tax in Northern Ireland to the Stormont Assembly in relation to such financial year as HM Treasury may appoint and subsequent financial years1. The Act sets out a mechanism for setting the rate which will be charged on the profits of certain trades and activities of Northern Ireland companies2.

The devolved rate will apply to trading profits only and primarily to certain micro, small or medium-sized enterprises. It will also apply to large companies and corporate partners to the extent that profits are attributable to a Northern Ireland trading presence. Certain trades and activities, including lending, investing and reinsurance activities, are excluded from the Northern Ireland regime, and non-trading profits, such as income from property, are excluded from the Act and remain chargeable at the main rate of corporation tax.

The new power will allow the Northern Ireland Assembly to set the Northern Ireland corporation tax rate by resolution. The rate for a financial year may be set at any level, higher, lower or the same as the UK main rate. If a rate is not set by resolution for a financial year, the rate for that year will be the rate set for the previous financial year. Until the Northern Ireland Assembly exercises the power to set a rate for the first time, the Northern Ireland

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