Iceland's 2015 Budget Includes VAT Rate Adjustments and Suspension of the Commodity Tax

On 9 September 2014, Iceland's Ministry of Finance presented the country's 2015 Budget. Key tax changes include:

• A reduction in the standard rate of VAT from 25.5% to 24%
• An increase in the reduced rate of VAT from 7% to 12%
• VAT exemption for certain tourism services will expire and become subject to the reduced VAT rate
• The commodity tax will be suspended

The changes will generally apply from 1 January 2015. The VAT exemption for tourism services will not expire until 1 May 2015.