New government will examine potential mechanisms for changing the corporation tax rate in Northern Ireland

The Coalition agreement between the Liberal Democrats and the Conservative Party in the U.K. includes an undertaking that the new government will examine potential mechanisms for changing the corporation tax rate in Northern Ireland.

There has been in the past lobbying for a lower corporation tax rate for Northern Ireland on the basis that the Irish Republic has had low corporation tax rates (currently 12.5%).

In 2007, Sir David Varney, who had been asked by the then-Chancellor to look at how tax policy could support growth in Northern Ireland, concluded that implementing a different corporation tax rate for Northern Ireland, as compared to the rest of the U.K., did not offer the best way forward. The position is now to be re-examined.