Country Rankings - Iceland
Jun 27, 2017 Iceland: give and takeHowever, rather than focusing here on the intricate details of Brexit, which are already filling countless column inches elsewhere, it's Greenland's next-door neighbour, Iceland, that I wish to move on to next. And that is because Iceland has done a quite unusual thing in the modern tax environment – announce a cut in its standard rate of value-added tax. It has been well document that a shift towards indirect taxation has taken place around the world in recent years – a period that has coincided with a substantial fall in corporate tax rates. This has meant that VATs and GSTs – the main sources of indirect tax revenue in most jurisdictions – have increased, both in terms of their rates and scope, or have been introduced where such taxes didn't exist before. For instance, in the EU, the average standard rate of VAT has moved well above 20 percent, with some member states having pushed rates out to 25 percent or more. And in other areas of the world, there seems to be unrelenting upward pressure on indirect taxes as governments attempt to increase tax revenue without resorting to more visible measures like income tax hikes. So Iceland, a nation which has been in dire fiscal straits recently, appears to be swimming against the tide with its intended VAT cut. Which is a good move, right? Yes and no. Don't be fooled into thinking that this is some sort of gift from the Government. Since the financial crisis, tourism has been Iceland's fastest-growing economic sector. And as part of the VAT changes, tourism-related services will be standard-rated instead of benefiting from a reduced rate of VAT. This is another example of how taxpayers are kidded into thinking they're getting a tax cut, when in fact their not, or at least not as substantial as the one being advertised.
Jun 20, 2016 Iceland: action!Indeed, governments seem to be in thrall of the movie industry, and have been falling over themselves to offer tax incentives to producers and investors in recent years. Iceland has an impressive list of movies that have used its dramatic icy vistas as a backdrop, yet still saw fit to improve its incentive scheme further recently — and likewise France. So why do governments seem obsessed with attracting "runaway" production, as it is called. The theory goes that this industry creates just the sort of highly skilled, highly remunerated and often technically orientated jobs that governments love to take the credit for making. Plus, big-budget productions need an army of ancillary workers to sustain them, so it is said that the benefits ripple out into the wider economy. An added bonus is that the industry often acts as a shop window for tourists – just look at how The Lord of the Rings and The Hobbit trilogies showcased New Zealand. But the theory doesn't always stack up, according to some studies. This has especially been the case in the United States, which looked to have reached the end of its film tax credit mania at state level about five years ago. Many states are now pulling the plug on these schemes after cost-benefit analyses revealed they had performed pretty dismally, and had generally been a wasteful use of taxpayer dollars. For example, Connecticut's incentive scheme generated a mere seven cents for every dollar spent. So, I suppose with these types of incentives, it boils down to horses for courses. France can pass for many different places with its varied landscape. And in the sci-fi genre, Iceland can double as just about any planet you dream up with its moon-like appearance. Indeed, it doesn't really matter what a country looks like if it has the skills base the industry requires, and well-targeted tax breaks to smooth the path. Connecticut, on the other hand, is a very nice place, but there's only so many movies you can make about hedge fund managers.
Nov 22, 2012 Iceland: EFTA starWhen playing the alphabet soup game (Harrods or Macy's, GBP12 or USD14 - things are always cheaper across the pond - and as an anglo-saxon sport you can't buy it on the Continent) EFTA is a trick question which people hardly ever get right. They think the 'A' stands for agreement, as in Free Trade Agreement. Of course it stands for Area. There was a time when there was also 'ex-EFTA' which was indecipherable even to aficionados, but the game hadn't been invented back then. Anyway, enough history: what remains of EFTA can be compared to a regulation-lite European Union, and focuses on the single market and trade agreements, as at this week's meeting, which wins it, or rather them, a star. 'Them' is Iceland, Liechtenstein, Norway and Switzerland, so it's a cheap and cheerful way of bringing three new countries into the table.