Published on : Saturday, April 1, 2017
From next year onward, travelers interested to explore Iceland’s natural beauty will have to shell-out more after the capital city announced a tax hike on Friday (March 31) on the sector. Of late, the sector had exploded immensely! The country declared the end of an 11 per cent reduced rate of value-added sales tax, claiming that it will make a typical holiday there about 4 per cent more luxurious. Tax on various hotels, travel agents’ services, campsites, pools and spas and such like will get higher to the regular rate and was reduced to 22.5 per cent.
Tourism in Iceland was badly hit by the 2008 global economic near-meltdown and has exploded seven times more in the previous seven years making the reduced rate unjustified as declared by the Government. Last year, 1.77 million visitors visited Iceland while 2.2-2.3 million is expected to make the trip this year.
To quote the finance minister, ‘Most types of tourism will be classified under the general value-added tax bracket.’ It was estimated that the initiation will decrease tourist number by 1 to 2 percent considering that cost was not the important factor and only parameter for the travelers pouring in the country. More than 83 per cent of visitors highlighted Iceland’s natural beauty as one of the main factors they chose to come and only 19 per cent cited low prices as an integral factor.