Global Daily Tax News, Iceland's 2027 Budget Targets A Fiscal Surplus, (Sep 10, 2026)

The Icelandic Government has set out plans to establish a budget surplus starting next year, in its 2027 Budget.

The Government said the Budget Bill will introduce "necessary changes on the revenue side to balance the state finances."

The Government said tax hikes will be introduced on higher income and wealthier taxpayers, while also closing loopholes and reducing exemptions.

Measures worth ISK34bn (USD283m) will be implemented in 2027, including an increase to the levy on banks from 0.145 percent to 0.254 percent, and the introduction of a new levy on tourist attractions.

The preferential VAT rate will be removed for saunas and public baths, and the refund of VAT incurred on labor costs for construction work on residential properties will be reduced from 35 percent to 20 percent.