Iceland’s ministry of finance released the 2014 budget proposals, which include tax cuts for individuals and companies on 1 October 2013.
The proposed measures are expected to increase real disposable income by 0.3% in 2014. To narrow the gap between tax brackets, reduce exemptions and increase the overall efficiency, the value-added tax system will be revised. Under the proposed changes the tax base for the bank levy will be extended and the rate will be increased from 0.041% to 0.145%. The general payroll tax on financial institutions will be lowered from 6.75% to 4.5% in 2014. The middle income tax bracket will be reduced by 0.8% from 25.8% to 25%.
