Business leader says predictable tax rules are vital for investment

Iceland needs a predictable and competitive tax environment to attract investment, Bjarni Benediktsson, director general of the Confederation of Icelandic Enterprise, told Morgunblaðið.

He was responding to Ölfus municipality mayor Elliði Vignisson, who said domestic and foreign investors were hesitant to invest in the municipality because of uncertainty about companies’ tax and operating conditions in the years ahead.

“The key issues are an efficient public administration, respect for deadlines and predictability,” Benediktsson said. “The investment environment, including the tax treatment of business operations, also needs to be competitive.”

Benediktsson said the concerns had been raised before by member organisations. At the Confederation’s annual meeting in early October, Rannveig Rist, who has decades of experience in energy-intensive industry, said international investors considering Iceland spoke to companies already operating in the country.

If those companies tell investors that tax rules are unclear and may change at short notice, that permit applications can take a long time to process, and that the government is not prioritising favourable conditions for export industries, it can have a significant effect on investment decisions, Benediktsson said.

He said major questions about the tax framework for data centres had remained unresolved for too long. He also pointed to energy-industry permit applications that had taken years to process.

Foreign investment in Iceland is low by international comparison and very low compared with OECD countries, Benediktsson said, adding that Iceland needs to attract more.