The State Alcohol and Tobacco Company of Iceland is a state owned company that has a monopoly on the sale of alcoholic beverages and tobacco in Iceland. It runs a chain of 46 stores named Vínbúðin(the wine shop) and is Iceland's sole legal vendor of alcohol for off-premises consumption, though in practice, most bars and restaurants will not prevent you from leaving with purchased drinks. High licensing fees make this an expensive option however, and alcohol is always at least twice as expensive outside the wine shop.
Iceland has very high taxes on alcohol. Historically, this was to curtail consumption. Tax rates in stores are not a percentage of price (such as a sales tax or income tax) but are proportionate to the alcohol content.