Icelandic Finance Minister Oddný Harðardóttir has announced that she intends to raise VAT on accommodation from 7% to 25.5%.
The current reduced rate was set in place to help boost the tourism industry in Iceland. Harðardóttir has said that the Icelandic tourism industry no longer needs to be subsidized by the state now it has recovered from the financial crisis.
The new rate will be effective from May 2013.
Find out more about tourism tax in Iceland from Tax News.