New Act on amendments to the Value Added Tax Act and the Competition Act , were approved by the Althingi yesterday, 29 April. They include a temporary reduction in the value-added tax from 24 per cent to 11 per cent. This reduction is a response to the impact of the conflict in the Middle East on fuel prices. It is emphasised that the reduction „is passed on in full to consumers in the final retail price of fuel“, as stated in the bill. The reduction applies to the period from and including 1 May to and including 31 August this year.
According to The law assigns the Competition Authority the task of monitoring that the reduction is passed on to consumers during the period.
The Competition Authority is now preparing an inspection based on the newly enacted legislation. After the weekend, the authority will send the fuel companies a letter requesting specific necessary information. The companies will also be placed under a regular reporting obligation for the duration of the period.
In connection with the above-mentioned information gathering, the Competition Authority will further determine the manner in which the monitoring will be conducted, including the criteria to be applied. fuel retailers, along with consumer interest groups such as the ASÍ (the Federation of Icelandic Trade Unions), FÍB (the Association of Icelandic Car Owners) and the authorities in this field, given the opportunity to comment on the arrangement of the monitoring and the criteria to be used.
See further information about Monitoring of the VAT reduction here.
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