I have contacted Merchant Technical Services regarding this and here is their response: Apologies for any confusion, but for a PayPal account set up for an Icelandic merchant, the only time zone that will be available on the webpage at https://www.paypal.com/businessprofile/settings/options/timezone is GMT -8 due to the country of Iceland only spanning one time zone. We confirm that the webpage's control is working as designed. If you notice any issues within PayPal that you believe to be a technical problem here at our end, feel free to reach out to us again. So, by this response, this limitation is by design and is not a bug as I previously thought. I just hope that PayPal will see us merely mortals worthy of having our correct time zone on the webpage and not some other one eight zones away. I still can't get my head around why I should have GMT Pacific where I am in GMT 0 zone. Go figure.
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