Iceland Reduces Corporate Tax Rate to 15%

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The Icelandic government announced a reduction in the corporate tax rate to 15% last week -- a move welcomed by the Invest in Iceland Agency.

Corporate tax rate

Iceland will soon have one of the lowest corporate tax rates in the world after the government announced that it will reduce the Icelandic corporate tax rate from 18% to 15%.

The move is part of a government strategy to make the Icelandic business environment one of the most competitive in the world. It is focusing on a simple and effective tax system with low corporate tax, rather than the creation of a multitude of different incentives.

The reduction in tax applies to the 2008 financial year and will come into effect for tax returns in 2009.

Corporate tax on profits in other Nordic countries ranges from 24%-28%, and the tax is even higher in the US, UK, Canada and Australia, at up to 36%.

Iceland has seen a number of international companies relocate their business to the EFTA country in the past few years. In particular, data centres have been springing up all over the country due to the abundance of inexpensive and environmentally-friendly energy.

Apart from the 15% tax on profits, other benefits include no municipal taxes on corporate profit, no alternative minimum tax, no net wealth taxes, no thin-cap legislation and deductible corporate dividends.

Due to its economic advancement, social stability and technological innovation, Iceland is ranked as one of the top countries in the world to live and do business in. Last year the country was at the top of the UN's Human Development Index, the World Competitiveness Yearbook, the Global Benchmark Report, and was ranked as the country with the least corruption by Transparency International.

For more information on setting up a business in Iceland, visit the Invest in Iceland Agency's website at http://www.invest.is

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