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A cut in Northern Ireland's rate of corporation tax alone, is unlikely to attract significant volumes of fresh overseas investment, a new report has said.

The report by PricewaterhouseCoopers, found "no evidence" the Irish Republic's low corporation tax, had, by itself, attracted high levels of foreign direct investment (FDI).

PwC said matching the Republic's rate could cost Northern Ireland around £280m with "no certainty of an equivalent uplift" in new FDI.

PwC tax partner, Martin Fleetwood, said that based on the Republic's experience, the case for cutting Northern Ireland's corporation tax alone to attract new investment "was not proven".

"From the 1950s, Ireland had three decades of low corporation tax, but comparatively little new investment," Mr Fleetwood said.

"Irish corporation tax actually increased in the 1980s, coinciding with an increase in US investment, so it is hard to invoke low corporation tax as the sole reason for the boom.

"Our research suggests that a variety of factors, of which low corporation tax was only one, contributed to the Celtic Tiger economy.

"An attractive tax regime, with world-class infrastructure and skills, makes a better offering."

Mr Fleetwood said that if corporation tax in Northern Ireland is to be cut, Westminster must give the Executive the power to do so, and that such powers of "fiscal flexibility" could let Stormont "vary other taxes".

"The debate over corporation tax has focused on the tax itself rather than the powers the Executive would need to implement any such cut," he added.

"These powers - based upon the Azores Judgement - are regulated by the European Union and may confer on the Executive the ability to vary a wide variety of taxes throughout the region.

"For over a decade, the Republic of Ireland has been using a very wide range of flexible tax incentives as the tools to target and attract high value-added FDI.

"The Executive may find that the power of fiscal flexibility would be of greater value in rebalancing the economy than a simple cut in corporation tax where the cost is high and the likely benefit is unproven."

PwC's investigation into the impact of Corporation Tax on FDI was prompted by a commitment from the UK coalition government to offer the NI Executive powers to "rebalance the economy."

Its report 'Corporation Tax - Game Changer, or Game Over?' says that overseas investors already in the UK, rank corporation tax as 17th in a list of investment drivers, that "prioritise, in order: language, culture and values; infrastructure; skills; and proximity to markets".

Also included in the report is a PwC survey of the tax regimes of 182 countries worldwide.

This said that the UK, "despite having a higher corporation tax level than many other countries", has the 16th most business-friendly tax regime.

PwC's chief economist in Northern Ireland, Dr Esmond Birnie, said that in terms of its attractiveness to foreign investment, Northern Ireland already performed relatively well in terms of employment creation.

"In 2009, with around 3% of the UK population, Northern Ireland secured 10.3% of all the new FDI jobs that came into the UK," he said.

"In the midst of a global downturn, that compares favourably to the region's long-term average of 7.4% of all new FDI employment.

"It would seem that much of the FDI which Northern Ireland attracted during 1998-2008 did not contribute much towards the goals of raising productivity and providing wealth creation.

"We should not underestimate the magnitude and complexity of improving this but a cocktail of financial incentives is more likely to be helpful in this regard than the relatively blunt instrument of the headline corporation tax rate."

Commenting following the publication of the report, Eamonn Donaghy of the Northern Ireland Economic Reform Group said that the Irish Republic had "fought tooth and nail" to keep its corporation tax rate of 12.5% in negotiations over its economic future last year.

He said that foreign direct investment had been "largely buoyant" in the Republic "despite the recession".

"FDI coming into the Republic of Ireland in the last 10 years has focused on profit generation, FDI coming into Northern Ireland has by and large been focused on cost reduction," he added.

"The grants that Invest NI can hand out are being significantly cut, so the question is what's the alternative?

"While cutting corporation tax might not be a magic bullet, it's as close to a magic bullet as you can get."