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Iceland: fiscal plans for 2018–22 presented

On 31 March 2017, the Minister of Finance and Economic Affairs presented the fiscal plan for 2018–22 to the parliament.

The plan emphasizes developing the infrastructure and strengthening the social welfare system. The tax system will be simplified in order to increase efficiency, whereas the public debt will be reduced rapidly. The tax measures of the plan are summarized below.

  • The social security contributions payable by employers and employees will be reduced
  • The bank tax will be reduced
  • The carbon tax will be doubled
  • The work on designing a comprehensive green tax system will continue
  • Most types of tourism-related services will be subject to the standard VAT rate with effect from 1 July 2018 or 15 months after the announcement is made. Restaurant services will, however, continue to be subject to the reduced VAT rate
  • The standard VAT rate will be reduced to 22.5% (currently 24%) with effect from 1 January 2019

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