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Iceland To Cut Headline VAT Rate, Cut Its Scope

by Jason Gorringe, Tax-News.com, London

06 April 2017


Iceland has set out its plans to add more goods and services to the standard rate of value-added tax, which is to be reduced.

Under the changes, which will take effect from July 1, 2018, or 15 months after an announcement is made, most types of tourism will be classified under the general value-added tax rate. Restaurant services will remain in the lower tax bracket, as food is taxed at the lower rate.

From January 1, 2019, the VAT rate will be reduced from 24 percent to 22.5 percent.

Also in its fiscal plan for 2018-2022, Iceland has said it will double its carbon tax, noting that it is low by international standards. The Government said work will continue on the design of a comprehensive green tax system.

The Government noted that further changes to the tax system, including the excise tax on rental cars, joint taxation provisions, and the reduction of the bank tax, will happen in this 2018-2022 period.

TAGS: tax | value added tax (VAT) | Iceland | food | carbon tax | standards | services | Tax

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