Tax uncertainty makes investors hesitate in Ölfus

Investors are holding back on projects in the municipality of Ölfus as uncertainty over taxes and business conditions grows, Mayor Elliði Vignisson told Morgunblaðið.

Vignisson said both domestic and foreign investors were concerned that tax increases could reduce returns if planned projects succeeded. He said the political climate in Iceland was increasingly affecting investment discussions, including projects in Þorlákshöfn, a town where businesses are developing value-creating projects and port-related activities.

He pointed to proposed nature and infrastructure levies on tourism companies, a planned increase in value-added tax on bathing lagoons, and tax increases affecting the fishing industry. These proposals have added to concerns in sectors including tourism and fish farming, he said. Ideas for a hotel and a bathing lagoon have also been discussed in Ölfus.

Vignisson said the municipality could not identify investors who had abandoned plans because of confidentiality obligations. Its largest investment proposals have involved fish farming, data centres, tourism and port-related services, he said, adding that concerns were growing across those sectors.

He warned that a lack of predictability could deter investment in an international market. Vignisson also criticised the government, saying political parties in government had gone back on promises, and named Viðreisn as an example. He urged authorities to support business development rather than create uncertainty for investors.