Last week PricewaterhouseCoopers in Belgium, released their study on incentives schemes applied in Europe and Canada. The study was initiated by the Invest in Iceland Agency both to emphasize the importance of incentives to attract foreign investors into remote areas and also to instigate dialog on how incentives could benefit foreign direct investment in Iceland in general.

The Icelandic tax system has, over the past few years, been made into one of the most competitive in the world. The system was simplified dramatically and the corporate tax rate was lowered down to 18% on net income. In order to keep it simple and transparent no incentives schemes are in place. The results of the study, however, show that sensible and logical incentives schemes, used under carefully controlled circumstances and based on financial calculations of the overall benefits for the country or the community involved, can be a powerful tool to attract FDI to remote areas in Iceland, or simply as a measure to attract new businesses and sectors in order to strengthen the Icelandic economy for the long term.

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