Political agreement lowers Norway's proposed salmon tax to 25 percent
Multiple political parties in Norway have reportedly reached an agreement on a new resource rent tax on aquaculture with a reduced tax rate of 25 percent, down from the originally proposed 40 percent.
The country’s current governing parties, the Labor Party and the Center Party, reached an agreement with the Venstre and Pasientfokus parties on the tax – giving it the majority it needs to pass. The new agreement sets the tax rate at 25 percent, increases the valuation discount in the wealth tax from 50 percent to 75 percent, guarantees municipalities and counties that harbor aquaculture operations receive higher income from the Aquaculture Fund, and according to a report by E24, also includes several proposals to strengthen the environmental protections and fund aquaculture innovation.
At current salmon prices and exchange rates, the tax contribution from the salmon industry would be NOK 5.7 billion (USD 516 million, EUR 481 million), down from the NOK 8 billion (USD 724 million, EUR 675 million) it would have been under the previously proposed 35 percent tax rate.
Norwegian salmon companies were thrown into turmoil in September when the government proposed a new resource rent tax on aquaculture, with effect from 1 January, 2023, that would have set a 40 percent tax rate on aquaculture operations. Uncertainty surrounding what the level of the tax would end up being led to a chilling effect on the salmon aquaculture industry as companies laid off workers, canceled planned farm permit purchases, and canceled license-capacity purchases.
The turmoil they faced was revealed in stock prices of leading salmon farmers listed on the Oslo Børs. Mowi, the world's largest salmon farmer, saw its stock price plummet in September 2022 to NOK 140 (USD 12.68, EUR 11.82) per share, its lowest level in five years. SalMar and Grieg Seafood saw their share prices chopped nearly in half in a matter of days.
Soon after the agreement was announced on Thursday, 25 May, all three companies enjoyed a spike in their stock prices. Mowi's shares closed the day at NOK 197.15 (USD 17.85, EUR 16.64), up from NOK 185.20 (USD 16.77, EUR 15.63) SalMar’s stock price jumped to NOK 518 (USD 46.91, EUR 43.73) at close, up from NOK 469.70 (USD 42.54 EUR 39.65). Grieg's shares opened the day at NOK 82.10 (USD 7.43, EUR 6.93) and closed at NOK 89.70 (USD 8.12, EUR 7.57).
In a press release, Grieg Seafood said the 25 percent rate is “significantly better” than the 40 percent originally proposed.
“Grieg Seafood will study the details of the final tax when they have been made public, and evaluate all investments that are put on hold in light of the final tax,” the company said.
Photo courtesy of Terje Aase/Shutterstock