Minister proposes low corporation tax rate

The Northern Ireland Economy Minister is expected to propose a new corporation tax rate for Northern Ireland today when he publishes a strategy document aimed at stimulating the economy.

Mr Adam Ingram will suggest that foreign companies setting up in Northern Ireland be taxed at a rate close to 10 per cent for the first five years, the level currently operating in the Republic for manufacturing companies.

New tax breaks for indigenous industry are also expected to be proposed.

The document, drawn up by the Department of Economic Development in consultation with a large number of the North's industrialists, will say that a low rate for incoming industry would give Northern Ireland a better chance to compete with the Republic for large foreign investment projects. The Republic's low corporation tax regime will remain, with agreement with the EU Commission to move to a standard rate of 12.5 per cent for all industry by 2005.

A special low rate for the North is likely to meet strong resistance from other regions in Britain and approval would be needed from the European Commission and the British Treasury.

Northern Ireland's Industrial Development Board, the body responsible for attracting inward investment, has made similar proposals before but failed to gain political support for them.

The document will be presented to parties expected to take seats in the new Northern Assembly today. The Ulster Unionists may oppose the proposal, as it would dilute Northern Ireland's connection with Britain, while the SDLP is understood to be in favour.

The corporation tax proposal will be included in a package aimed at increasing foreign investment in Northern Ireland. Other proposals in the document will focus on greater co-operation between the Republic and Northern Ireland and will examine how the new cross-Border bodies might assist in economic development on both sides of the Border.

Sources in the Republic were sceptical last night about whether the proposal could get widespread support. Resistance from industrial development agencies in Wales and Scotland is expected to be a major obstacle. Both regions regularly compete with Northern Ireland.