Iceland: We’ll Fix the Tax Incentives

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The government of Iceland says it will take steps to keep the country’s emerging data center industry competitive, responding to concerns that the nation’s tax policies were discouraging potential prospects.  

As we reported yesterday, some legislators in Iceland have balked at eliminating the value-added tax (VAT) on server equipment, a common incentive in many U.S. states and many European locations. There were reports that IBM is reconsidering plans to take space at a Verne Global project, citing the extra expense of paying taxes on servers housed in Iceland.

In a letter to industry leaders, Iceland finance minister Steingrimur Sigfusson said the tax situation would be addressed. “A solution is currently being worked out and will be presented shortly so necessary changes can take effect as soon as possible,” he wrote. “A comparable tax system will enable the Icelandic Data Center industry to enjoy their special competitive advantage.”

Katrin Juliusdottir, minister of industry, energy and tourism, welcomes the announcement. “We remain committed to make sure that our data center industry is fully competitive,” said Juliusdottir.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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  1. Martin Hannigan

    The Minister said "The Icelandic government is going to address all relevant tax issues to ensure that Data Centers in Iceland, servicing international clients, are fully competitive". That's a positive step forward. The final step to having a viable industry that is truly competitive is to address the cost structure issues around network capacity to and from Iceland.