Norwegian industry eyes tax alternative

A group of Norwegian politicians have travelled to the Faroe Islands to look at its fish farming tax model, which is generally regarded as being less hostile towards the industry than the regime due to be introduced in Norway.

The initiative for the visit came from employer organisation Seafood Norway, and the five-strong group included national and local representatives on the right and left of the political spectrum.

The Faroes tax model is based on the monthly harvest weight multiplied by the average spot market price. It means the rate varies according to the selling price and can go up or down.

Production costs are also taken into account, so the tax liability can rise or fall depending on profitability. Iceland is considering adopting a similar model.

It appears, however, that the new Faroe Islands government is proposing a big rise in its salmon ground rent tax, doubling the rate to 20% at the top end.

The surprise news was disclosed earlier this month by Bakkafrost, which said the proposal has gone out to the industry for consultation. The rise is higher than that suggested by the previous administration, but the Faroe islanders elected a new Social Democrat-led government in December.

The new proposal consists of nine tax rates which range from 0.5% to 20%, calculated around the FishPool price index and production costs. The average production cost for 2021 is proposed as baseline, which is set to be DKK 39.15 (around NOK 59, or £4.65, per kg).

At the highest level the rate will be 20% if the FishPool price exceeds the equivalent of NOK 119 per kilo (£9.29) which is the price Norwegian buyers were paying for the best quality fish last week. Bakkafrost has yet to comment on how it feels about the plan, but the industry will clearly not be happy, even though the rate is still less than that proposed in Norway.