The government of the Faroe Islands has passed a proposal increasing the revenue tax on the salmon farming industry, up to a maximum of 20 percent.
The government first presented the proposal in 2022, around the same time as the government of Norway presented its own increased salmon resource tax. Now, according to Faroese salmon farming producer Bakkafrost – the largest producer of salmon in the Faroes Islands – the Faroese Parliament has passed the new tax rate, lifting taxes proportionally based on the cost of production and the Fish Pool salmon price index.
The new taxes, which will go into effect on 1 August, 2023, are based on the average cost and price of salmon. According to Bakkafrost, the tax rate will apply as follows:
- If the cost of production per kilogram is higher than the FishPool index price, the tax rate will be 0.5 percent.
- If the FishPool Index is between the cost of production, and DKK 5.00 (USD 0.72, EUR 0.67) higher than the cost of production, the tax raises to 2.5 percent.
- If the FishPool price is between DKK 5.00 and DKK 15.00 (USD 0.72 and USD 2.17, EUR 0.67 and EUR 2.01) higher than the cost of production, the tax is 5 percent.
- If the FishPool price is between DKK 15.00 and DKK 20.00 (USD 2.17 and USD 2.89, EUR 2.01 and EUR 2.68) higher than the cost of production, the revenue tax is 7.5 percent.
- If the FishPool price is between DKK 20.00 and DKK 25.00 (USD 2.89 and USD 3.62, EUR 2.68 and EUR 3.35) higher than the cost of production, the revenue tax is 10 percent.
- If the FishPool price is between DKK 25.00 and DKK 30.00 (USD 3.62 and USD 4.34, EUR 3.35 and EUR 4.02) higher than the cost of production, the revenue tax is 12.5 percent.
- If the FishPool price is between DKK 30.00 and DKK 35.00 (USD 4.34 and USD 5.06, EUR 4.02 and EUR 4.69) higher than the cost of production, the revenue tax is 15 percent.
- If the FishPool price is between DKK 35.00 and DKK 40.00 (USD 5.06 and USD 5.79, EUR 4.69 and EUR 5.37) higher than the cost of production, the revenue tax is 17.5 percent.
- If the FishPool price is DKK 40.00 (USD 5.79, EUR 5.37) or higher than the cost of production, the revenue tax is set to its maximum level of 20 percent.
The average production cost of salmon will be assessed twice a year, which will then determine the applicable tax rate.
Bakkafrost Group CEO Regin Jacobsen said in the company's Q1 2023 update Bakkafrost will likely have to adjust its previously announced five-year investment plan due to the new tax. The firm's new plan will be presented on its Capital Market Day on 6 June, 2023.
Photo courtesy of Bakkafrost
