Northern Ireland’s Minister for Enterprise is just back from an investor-wooing mission to the US where he has been busy promoting what he calls the North’s new “triple whammy offering of tax, talent and value”.

Jonathan Bell's visit to San Francisco and New York is the start of the Northern Ireland Executive's formal campaign to get the message out about the introduction of a new lower rate of 12.5 per cent corporation tax from April 2018 in the North.

Bell is firmly in the camp that believes by attracting more investors a lower rate of corporation tax could potentially deliver 30,000 additional jobs over the next 15 years in the North.

However, there is another school of thought that believes lower rates of corporation tax could also deliver something else – tax-dodgers.

David Thomas, education and campaigns co-ordinator with the international development charity Christian Aid, said it would like to see political leaders in the North also selling another key message that Northern Ireland will not become a tax haven.

“Now that corporation tax-setting powers have been devolved to Northern Ireland and the rate has been set we would like to make sure that Northern Ireland is also saying that it does not want to profit on the back of abusive tax practices – in Northern Ireland or elsewhere.”

Fine balance

The charity believes there is a fine balance to be struck while promoting the attractiveness to investors of a low corporation tax environment while also ensuring that the North does not create a climate that encourages corporations to actively engage in tax-dodging.

Christian Aid has in the past been highly critical of Ireland’s corporate tax regime, claiming that at worst it helped to facilitate elaborate tax avoidance schemes that resulted in the poorest countries losing billions every year in revenue.

It appears keen to help Northern Ireland start off on its new journey of lower corporation tax rates on the right foot.

The charity’s particular focus on Northern Ireland’s lower corporation tax rates comes as it has also just launched a new UK initiative which aims to encourage local authorities to show zero tolerance to tax dodgers when it comes to awarding lucrative contracts. Its “Sourced” campaign is asking councils to include a range of tax compliance questions and possibly ask suppliers to detail their tax records when bidding for public contracts.

Thomas said: “It is only right that large companies bidding for lucrative taxpayer-funded council contracts should be expected to be socially responsible taxpayers themselves.

“There is a huge amount of money involved in public sector contracts, and councils should be sending out the message that tax-dodging is not acceptable – not at home or anywhere in the world.”

Christian Aid has estimated that developing countries stand to lose as much as $160 billion each year as a result of tax-avoidance measures taken by companies.

According to Thomas, the North is ready to embrace the concept of excluding tax-dodging companies – Belfast City Council was one of the first in the UK to introduce detailed tax compliance questions as part of its procurement procedures, and Lisburn and Castlereagh city councils have also adopted them.

Specific questions

Belfast City Council, for example, now asks all suppliers to answer specific questions on non-payment of taxes.

Companies tendering for public contracts have to detail if it has "been established by a judicial or administrative decision having final and binding effect in accordance with the legal provisions of any part of the United Kingdom or the legal provisions of the country in which your organisation is established (if outside the UK), that your organisation is in breach of obligations related to the payment of tax or social security contributions?"

According to Christian Aid, the prospect of losing a potentially multimillion pound contract might make businesses think twice about who tax-dodging could really hurt most at the end of the day.