The UK Government has today published details of new legislation that will enable corporation tax powers to be devolved to the Northern Ireland Executive.

Theresa Villiers, Secretary of State for Northern Ireland, initially revealed details of the Corporation Tax (Northern Ireland) Bill to an invited audience of business people at the headquarters of Kelvatek, a Lisburn based company.

The bill is the first step in the process of devolving new tax setting powers to the local executive.

The British government hopes the bill will be passed before the UK general election in May.

Theresa Villiers said there was strong support for the corporation tax bill among all five parties in the Northern Ireland Executive and the business community.

She believes it has the potential to “create thousands of new jobs and stimulate crucial growth in the Northern Ireland economy” by encouraging domestic businesses to invest further and by attracting new foreign direct investment.

“In the light of an economy that for many years has been over-dependent on the public sector allowing the Assembly to set its own rate of corporation tax offers the prospective of a transformative change in Northern Ireland.

“The bill is subject to the important conditions contained in the Stormont House Agreement reached with the NI Executive parties in December after 11 weeks of negotiations. That Agreement involved compromise on all sides including from the UK and Irish Governments. But it is fair and balanced and provides the opportunity to build a brighter future for Northern Ireland,” the Secretary of State said.

The current rate of corporation tax in Northern Ireland is 21 per cent compared to 12.5 per cent in the Republic.

The Northern Ireland Office estimates that if the rate was lowered around 34,000 businesses in the North would benefit including 26,500 small to medium sized enterprises.

The Secretary of State outlined that the Assembly will have the power to set the corporation tax rate over most trading profits – but this will not extend to non-trading profits such as income from property.

The UK will retain power over the corporation tax base, including reliefs and allowances.

The British government is keen to ensure that the proposed new corporation tax regime in Northern Ireland will “encourage genuine investment that will create jobs and growth” and not establish a haven for “avoidance and profit-shifting”.