Faroese government proposes higher child deduction and financial-sector tax

The Faroese government has proposed raising the child tax deduction and increasing the corporate tax rate for financial companies from 18 to 22 per cent, KVF reports.

The deduction would rise by a total of 1,500 kroner over three years. The increase is expected to cost the state 6.5 million kroner in 2028, 13 million in 2029 and 19.5 million in 2030 and each year thereafter.

The higher tax on financial companies is forecast to bring in between 25 million and 40 million kroner annually for the state and municipalities from 2028. The state would receive 17.5 million to 28 million kroner, while municipalities would get 7.5 million to 12 million.

The government says the proposal would bring financial companies and other businesses closer to equal treatment under tax and duties rules. The financial sector has historically been exempt from liability under the value-added tax law. The proposal has been submitted to the Faroese parliament.