Hotel Tariff Generates ISK 56 Million Skip to content

Hotel Tariff Generates ISK 56 Million

The tariff added to accommodation which was implemented at the beginning of 2012 generated ISK 56 million (USD 450,000, EUR 350,000) for the state treasury in the first six months of this year. The tariff amounts to ISK 100 (USD 0.80, EUR 0.60) per night of accommodation.

hotelrvkhiltonnordica_psPhoto by Páll Stefánsson.

Minister of Finance Oddný Harðardóttir said in parliament on Monday that the amount generated was in accordance with the ministry’s strategy and that the fee was expected to generate ISK 115 million (USD 927,000, EUR 720,000) in 2012, Morgunblaðið reports.

The proposed increase in value added tax (VAT) on travel services also came up for discussion in parliament.

According to MP for the Progressive Party Sigurður Ingi Jóhannsson, several projects to build hotels in Skagafjörður, Vík í Mýrdal and Reykhólasveit have been canceled in light of uncertainties regarding the proposed tax.

Oddný says that there are no indications that suggest that the number of tourists to Iceland will drop as a result of the tax but rather that the number of visitors will level out.

The Icelandic government plans to raise the value added tax (VAT) on accommodation from 7.0 to 25.5 percent as of May 2013, making the VAT on accommodation in Iceland the highest in Europe. The proposal has been harshly criticized by the Icelandic Travel Industry Association.

The government argues that it is necessary for the industry to grow under realistic conditions and not with an advantage over other industries. The tourism industry is currently exempt from the full VAT rate.

Click here to read more about the proposed hotel tax.

ZR

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