VAT is due to rise from 7% to 25.5% from 1 May 2013
Iceland’s local tourism boards are fighting back after the national government decided to triple VAT on accommodation, restaurant meals and tourist attractions. VAT is due to rise from 7% to 25.5% from 1 May 2013. Northern Iceland’s Skagarfjörður municipality has voiced its “strong opposition” to the planned increase, which would, it says, result in falls in both tourist figures and in the number of people employed by the industry. Tour operators are also in opposition, arguing that tourists will go elsewhere if Iceland becomes too expensive.
Incoming tourist numbers could drop by 48,000 a year if the hotel tax increases so radically, the Institute of Economic Studies at the University of Iceland says.
[photo courtesy Icelandic Tourist Board]