Northern Ireland corporation tax cut could 'change economy overnight'

Pressure on the Treasury to allow Northern Ireland the power to set its own rate of corporation tax is mounting, after the Confederation of British Industry (CBI) said a lower rate could improve the country's economy 'overnight'.

The comments come as the Treasury is expected to reach a decision about the country's corporation tax powers this summer.

Companies in Northern Ireland currently follow UK corporation tax rates, paying a main rate of 24 per cent - falling to 22 per cent by 2014 - and a small profits rate of 20 per cent.

Speaking to the Belfast Telegraph, Ian Coulter, chairman for the CBI in Northern Ireland, claimed the cut in the business tax would be 'an important development' for the country, saying: 'If we can get this it will change the economy overnight.'

Coulter said a decision by the summer would allow enough time for the law to be passed in time for the Finance Bill 2014, boosting business confidence, helping to stimulate investment and creating new jobs.

A meeting between the CBI and the Treasury took place last month to discuss how a corporation tax cut would be rolled out to businesses.

The CBI has continually campaigned for a separate rate of corporation tax for Northern Ireland, saying it has a 'unique' set of business circumstances different to that of the rest of the UK.

Coulter, as reported in the Belfast Telegraph, said claims that a lower rate could cost the Treasury around £400 million were exaggerated, and that the figure would be closer to £200 million.

The CBI is to hold a Westminster reception next week in which business leaders and MPs are to attend in support of cutting the rate, with some supporters arguing that it should be reduced in line with the Republic's 12.5 per cent rate.