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03/03/2004
Tax and increased costs may hit business confidence says PwC
Northern Ireland could be facing budget and tax changes that will dampen business confidence, according to business advisors PricewaterhouseCoopers (PwC).
PwC’s latest, 'United Kingdom Economic Outlook' (UKEO), says that while the Northern Ireland economy continues to perform relatively well, it has a critical over-dependence on public expenditure, retailing and hospitality.
PwC’s tax partner Martin Fleetwood said that increased costs and a Treasury ‘normalisation’ of Northern Ireland tax affairs may also impact on private sector competitiveness: “The cost of doing business in Northern Ireland is moving inexorably upwards.
“Spiralling energy, compliance and insurance costs are being compounded as successive Budgets increase the burden of taxation on business.
“Fiscal incentives unique to Northern Ireland are being phased out and collectively these measures may dampen business and investment confidence”
PwC says that with the Treasury not renewing the annual Order exempting Northern Ireland business from tax on capital grants, companies receiving capital grants from InvestNI may how have to pay up to 30% of the value in Corporation Tax.
The increased statutory audit threshold - from £1m to £5.6m - which was announced for UK businesses in December’s Pre-Budget Report (PBR), has not yet been extended to NI.
In addition, PwC expects that the Budget on 17 March will contain measures to penalise small companies that pay dividends to their directors.
Looking to the forthcoming Budget, PwC says that the budget deficit will be slightly above the Chancellor’s Pre-Budget Report estimate of £37bn. However, while Treasury says the deficit will fall to around £30bn by 2005/06, the PwCsaid their scenario suggests the deficit will actually increase to over £40bn, putting pressure on interest rates and public expenditure priorities.
(MB)
PwC’s latest, 'United Kingdom Economic Outlook' (UKEO), says that while the Northern Ireland economy continues to perform relatively well, it has a critical over-dependence on public expenditure, retailing and hospitality.
PwC’s tax partner Martin Fleetwood said that increased costs and a Treasury ‘normalisation’ of Northern Ireland tax affairs may also impact on private sector competitiveness: “The cost of doing business in Northern Ireland is moving inexorably upwards.
“Spiralling energy, compliance and insurance costs are being compounded as successive Budgets increase the burden of taxation on business.
“Fiscal incentives unique to Northern Ireland are being phased out and collectively these measures may dampen business and investment confidence”
PwC says that with the Treasury not renewing the annual Order exempting Northern Ireland business from tax on capital grants, companies receiving capital grants from InvestNI may how have to pay up to 30% of the value in Corporation Tax.
The increased statutory audit threshold - from £1m to £5.6m - which was announced for UK businesses in December’s Pre-Budget Report (PBR), has not yet been extended to NI.
In addition, PwC expects that the Budget on 17 March will contain measures to penalise small companies that pay dividends to their directors.
Looking to the forthcoming Budget, PwC says that the budget deficit will be slightly above the Chancellor’s Pre-Budget Report estimate of £37bn. However, while Treasury says the deficit will fall to around £30bn by 2005/06, the PwCsaid their scenario suggests the deficit will actually increase to over £40bn, putting pressure on interest rates and public expenditure priorities.
(MB)
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