The Faroese Government has officially presented the country’s parliament with details on how it plans to increase the revenue tax on the salmon farming industry.
Bakkafrost CEO Regin Jacobsen sent out an alert last week that an increase was being proposed for his own country following the Norwegian government’s controversial decision to introduce a new land tax for salmon and trout producers.
He has yet to disclose how much the proposals will cost the company but some reports suggest the industry as a whole may have to stump up an extra DKK 60 million – or around £7m.
The Faroese proposal includes three important changes to the current revenue tax system, originally introduced in 2014:
- changing the number of applicable tax rates from three to five;
- increasing the salmon price thresholds that determine when each tax rate is applicable; and
- linking the salmon price threshold to the average production cost for the Faroese salmon industry, which will be assessed annually.
The thresholds are based on the average annual production cost for the Faroese salmon industry. For 2023, an average production cost of 39.15 DKK/kg will be applied.
For 2023, the proposed change means that the revenue tax rates are likely to be:
- 0.5% if the salmon spot price is less than 39.15 DKK per kg (approx. 55 NOK per kg);
- 2.5% if the salmon spot price is between 39.15 and 44.15 DKK per kg (approx. 55-62 NOK per kg);
- 5.0% if the salmon price is between 44.15 and 54.15 DKK per kg (approx. 62-76 NOK per kg);
- 7.5% if the salmon price is between 54.15 and 69.15 DKK per kg (approx. 76-97 NOK per kg); and
- 10% if the salmon price is above 69.15 DKK per kg (approx. 97 NOK/kg).
The proposed changes have yet to be approved by the Faroese Parliament.