by Lisa A. Grimaldi | September 12, 2012

 Iceland's government plans to increase the country's value-added tax on hotel rooms, restaurant meals and tourist attractions from 7 percent to 25.5 percent, effective May 2013. According to press reports, current 7 percent rate of VAT had initially been implemented as a means to boost the country's tourism industry, which has been striving over recent years to rebalance its economy away from the financial sector and real estate. IIn response to the measure, Tom Jenkins, chief executive of the European Tour Operators Association, issued a statement saying, "Iceland [had been losing] its perception as an expensive destination; this tax rise effectively punctures that impression."