Iceland will have one of the lowest corporate tax rates in Europe and North America, after an announcement by the government that it will reduce rates to 15%.
The change applies to the fiscal year 2008 and comes into effect on tax returns filed in 2009.
The change further improves the competitive environment of companies in Iceland and is designed to boost foreign investment into the country.
The government‘s strategy focuses on creating a simple and effective overall tax system with low corporate tax, instead of creating complicated incentives.
The fiscal system in Iceland is both simple and effective, and has been recognized as such by a number of international companies that have decided to relocate their business to Iceland in the past few years.
The main attraction has been the low 18% flat tax rate levied on corporate net gain, a rate which has become even more attractive following this week‘s reduction to 15%.
The change significantly improves the competitive environment of Icelandic companies. In the Nordic countries, companies pay in the range of 24%-28% tax on their profits and the ratio is even higher in the US, UK, Canada and Australia, at up to 36%.
Highlights of the Icelandic fiscal system:
• 15% tax on profit
• No municipal taxes on corporate profit
• No alternative minimum tax
• No net wealth taxes
• Deductible corporate dividends
• No Thin-Cap legislation
For more information on investing in Iceland visit www.invest.is