Two days ago the final government proposal on the "salmon tax" in Norway was released. Thus, We Are Aquaculture covered the details of Finance Minister Trygve Slagsvold Vedum's approach to the Norwegian parliament, the main changes are explained with seven questions.
What does the rate affect? It is proposed that the resource rent tax is restricted to standard, commercial fish farming licenses relating to the production of salmon, trout, and rainbow trout.
How much is the rate? The rate is set at 35%. After the controversy of 40%, there has finally been a 5% decrease over the initial proposal.
When starts? The tax became effective in early January, but the specific details of the proposal were not agreed upon until 28 March. It will be retroactive.
What is the threshold for paying tax? There is a minimum threshold above which companies start paying the tax. This has finally been increased to NOK 70 million compared to the original proposal. With it, the government intends to ensure that only companies with large profits pay the tax.
What about the price board? The Government proposes to grant statutory authority to base gross receipts from the sale of salmon, trout, and steelhead on tax assessment prices to be determined by an independent price board. This involves setting market prices for tax purposes sold in a free market. The objective is for the tax assessment price to be equivalent to the market value of the fish at the time it leaves the pen, regardless of where in the value chain the sale takes place.
What processes does it apply to in aquaculture? Only to aquaculture, it does not apply to other related processes in the sector. This would imply that activities that take place before and after the at-sea phase (broodstock and smolt production or slaughtering) will be subject to normal corporate income tax.
How are taxes calculated? The proposal wants taxes to be structured on cash flow, just as with oil and natural gas. The proposal wants to put an effective tax rate of 35%, and the formal tax rate at 44.9%.
The cash flow tax has the same characteristics as the passive participation of the State in the company. In this case, the State assumes an equal share of all future revenues and costs. In case this income is negative from resource rents it can be carried forward with interest and deducted from future resource rents. The deduction would retain its initial value.