The Icelandic government this week announced that it would lower the corporate tax rate in Iceland to 15%.
The change applies for transactions during the 2008 financial year and will come into effect for tax returns filed in 2009.
The reduction in tax from 18% to 15% is part of a strategy to make the Icelandic business environment one of the most competitive in the world. Companies in the Nordic countries pay in the range of 24%-28% tax on their profits and the ratio is even higher in the US, UK, Canada and Australia, at up to 36%.
The government is focusing on a simple and effective tax system with low corporate tax, rather than the creation of a multitude of different incentives used in other countries.
Iceland has been a key destination for a number of international companies that have decided to relocate their business to the country in the past few years. In particular, data centres have been springing up all over the country thanks to the abundance of cheap and environmentally friendly energy.
Apart from the 15% tax on profits, other highlights of investing in Iceland include no municipal taxes on corporate profit, no alternative minimum tax, no net wealth taxes, no thin-cap legislation and deductible corporate dividends.
For more information on corporate taxes in Iceland visit www.invest.is