Iceland Temporarily Reduces VAT Rate on Fuels

The Icelandic parliament (Althingi) approved the Law Amending the Value Added Tax Act and the Competition Act (Fuel Tax Rate) on 29 April 2026. The law provides for a temporary reduction in the VAT rate on the import and sale of specified fuels (gasoline, diesel, biofuels, etc.) from 24% to 11% with effect from 1 May to 31 August 2026. Provisions are also included to ensure that the VAT reduction is passed on to consumers.