Iceland moves on capital controls, to tax money outflows

Posted 08/06/2015 - 16:18 by anrigaut

0
Your rating: None
2015-06-07 23

Iceland said on Monday it would impose a 39 percent tax on creditors wanting to take assets reclaimed from its failed banks out of the country, a first step to lifting capital controls that have been in place since its 2008 crash.

The government hopes the tax will prevent a sudden exodus of capital that could crush the crown currency and hurt the economy as it recovers from the spectacular collapse of the North Atlantic island's bloated banking sector seven years ago.

But creditors with billions of dollars worth of assets frozen in three bankrupt lenders could launch legal proceedings against the country, risking years of action that would keep Iceland locked out of international markets.

The government said investors in Icelandic assets such as government bonds could also get their money out of the country by selling crowns to the central bank. Alternatively, they could reinvest their capital in newer government debt that will be convertible out of crowns at maturity.

Because the central bank controls the exchange rate, investors using its currency auctions to repatriate their money could get a less favourable price for their crowns than in the currency markets.
...