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Iceland

Basic Information

Area: 103,000 km²

Calling code: +354

Population: 316,252

Official Language: Icelandic

Time zone: GMT (UTC+0), Local time: 18:48

Overview

The island of Iceland is located in the Atlantic Ocean, and it is one of the 5 Nordic countries in Northern Europe. It is the second largest island in Europe after Great Britain, spanning some 103,00km2. It has a small population of 320,000, of which 92% live in urban areas, and over 60% live in and around the capital city of Reykjavik.

The government of Iceland is based on a representative democracy, with a new president elected by members of the voting public on a four year basis. Iceland is divided into 8 regions for geographical purposes, along with 23 counties and 79 municipalities. Iceland is not currently a member of the European Union (EU), although it is a part of the European Economic Area (EEA), which allows is to participate freely in the European markets. The currency used is the Icelandic krona (ISK).

Economy

The service sector is the largest of all sectors, contributing over 70% of the total GDP figure of $12.5billion, and employing 73% of the entire labourforce. The largest companies in the country are Iceland Air (transportation), Actavis Group (pharmaceuticals), Baugur (retail) and SIF Ltd (food). The University of Iceland employs 400 full time staff and over 1,800 non-tenured staff making it the largest single workplace in the country.

Iceland is an export led country, exporting $4.2 billion worth of goods annually, mainly via the countries sea ports or the Keflavík International Airport's separate cargo terminal, which is used as a base for three cargo airlines: Air Atlanta Icelandic, Icelandic Air cargo and UPS (operated by BlueBird Cargo). Fishing and fish related products account for over 70% of the countries total exports, most of which are shipped to the Netherlands, the United Kingdom, the Untied States and Japan. Goods imported in recent years comprise mostly of machinery and equipment from Norway, Germany and Sweden.

The Human development Index recently ranked Iceland as having the 3rd highest development rate in the world, after Norway and Australia, based on factors such as education, life expectancy and GDP.

Infrastructure

There are 99 airports located in the country, although the majority of these offer domestic flights only. There are a total of 6 major international airports, the largest being Keflavík International Airport (KEF), which is located 50km away from Reykjavik city centre and can be accessed via the freeway. The airport serves as a hub between America and Europe, while Iceland Express and Iceland Air offer flights to London, which take approximately 2 hours and 30 minutes.

There is no train system in operation in the country, so most commuters either use road transport or the BSI bus service, which operates routes to most major locations. Iceland has a total of 4,617km of paved roads, including a large ring road which runs around the entire country and passes through Reykjavik, Borgarnes, Blönduós, Akureyri, .Egilsstaðir, Höfn and Selfoss. There are small roads which connect to the ring road to smaller rural areas, although many of these remain unpaved. There are three major ports in Iceland: Grundartangi, Hafnarfjordur and Reykjavik.
Iceland is one of the most environmentally friendly countries in the world, based on its energy production. Roughly 81% of all energy used in the country comes from renewable sources such as geothermal and hydropower, while oil is imported to fulfil the rest of its energy needs.

Workforce

The Icelandic workforce figure is estimated to be 180,000 (2009), most of which are highly educated. The official written and spoken language is Icelandic, while English is taught in all major secondary schools and the majority of the population can speak it fluently. Over 93% of the total population are officially Icelandic, while most of the remaining 7% consist of Poles, Lithuanians, Germans, Danes and Portuguese nationals.

The Icelandic education system is split into four separate levels: playschool, compulsory, secondary school and higher education. Attendance is compulsory for all citizens aged between 6 and 16 years of age, and is provided by the state free of charge. There are a total of 9 higher education institutes in the country, the largest being the University of Iceland, which is located in Reykjavik and is home to 16,000 students. There are currently no tuition fees for the majority of the universities, and all that is payable is a small registration fee, making higher education more accessible to the general public. The education system helps to produce a high national literacy rate of 99%. The unemployment rate almost doubled from 2008-2009, when it rose from 4.8% to 8.2% in a year.

Business Costs

Costs for the leasing of office space are relatively low, with the capital city of Reykjavik having the highest costs in the country, however they are still lower than prices in European cities such as Paris, Frankfurt and Madrid.
Iceland has fixed tax rates, which are set out in a simple and structured system for both individuals and corporations. Unlike most other European countries the personal tax rate is fixed at a flat rate of 22.5% of annual income, regardless of the amount earned by the individual, there are additional municipal taxes which are added onto this amount, but these will never exceed 12.97%. There are also many tax deductions available, such as an allowance for married couples, to help ease the tax burden on the individual. Corporate taxes are amongst the lowest in the world, at just 18%. Despite the low income taxes, VAT rates are the highest in Europe at 25.5% for most goods and services, although a discounted rate of 7% is applicable to newspapers, books, heating, electricity, music and most foodstuffs.
The minimum wage rate is set at ISK 130,000 per month, although individual sectors may have separate higher wage rates, as the trade unions are responsible for collective bargaining salaries for the workforce. According to data collected by Statistics Iceland, the country has some of the highest labour costs in Europe - higher than the average European Union rate, particularly for those working in construction.
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