The main UK corporation tax rate for 2012/13 is 24% dropping to 23% from 1 April 13 and 21% from 1 April 2014.
However, the ROI rate is 12.5%, well below the UK rate. That is why N Ireland politicians are trying to get the NI corporation tax reduced to 12.5%.
In Autumn 2012, the government made a statement announcing the latest reduction in corporation tax and Osborne compared it favourably to headline rates elsewhere, including the 40% levy in the US, 33% in France and 29% in Germany.
He said, “this is the lowest rate of any major western economy. It is an advert for our country that says: come here; invest here; create jobs here; Britain is open for business.” The headline UK rate has already been reduced from 26% to 24% this year.
The latest move brings the UK corporation tax rate in line with Luxembourg, which also charges 21% on business profits. Luxembourg’s tax regime is viewed by many companies – such as Amazon – as more appealing than Britain’s. However, the UK will still levy a higher rate than Ireland, which has a rate of 12.5%.