Salmon companies in Norway continue to criticize a 40 percent resource tax on aquaculture operations in the country, calling on the government to make the tax scheme more predictable even as the tax took effect on 1 January.
The proposed resource tax had an immediate chilling effect on the salmon aquaculture industry in Norway when it was first announced in 2022, with companies laying off workers and canceling planned farming permit purchases and license-capacity purchases as investment in the industry was put on hold. Now, Norway's salmon-farming companies are continuing to grapple with the tax – which was debated and adopted by Norway’s Storting in December 2022 – and its implications for the industry.
In public comments submitted to the government on 4 January, Mowi – the world's largest salmon company – said the government's explanation of how tax would actually be applied has continued to shift. The company said Norway's Ministry of Finance has not clarified whether the tax will be applied to salmon prices as determined by public market determinations such as the Nasdaq Salmon Index, or by the companies themselves via disclosure of signed contracts.
The imposition of the tax, Mowi said, “without the industry knowing which tax regime it will be subject to and without the proposal being sufficiently investigated,” is “irresponsible of the current government.”
Salmar, meanwhile, in comments made on 3 January, asserted the tax is based on false assumptions made by the government.
An initial government recommendation of the tax legislation claimed Norway's salmon-farming industry was “essentially awarded permits cheaply or free of charge” and that the industry went from minor to “one of Norway’s most-profitable industries.” It said a majority of the industry is dominated by a “few ownership circles,” and that country's principle that “the community should have a share of the return from the exploitation of the community’s natural resources has served Norway well.”
Salmar objects to that initial assessment, which it said is flawed.
“The proposal is based on the fact that the production of food is a basic income industry that over time reaps extraordinary returns that are disproportionate to the risk. This is not true,” the company said in its comments on the proposal. “The entire tax proposal thus rests on failing premises.”
The company said in contrast to oil and power production – which face similar taxes based on the premise Norway should benefit from the exploitation of a natural resource by a company – farmed salmon is not a natural resource.
“Aquaculture constitutes a long and complicated value chain with great biological risk. No input factor in the production of salmon – nor the finished product – comes like rain from the sky or finished product form the depths of the sea,” Salmar said.
Cermaq made a similar argument, saying all salmon raised in Norway are the product of research and production by Norwegian companies.
“The proposal does not take into account that aquaculture operators do not deplete natural resources (such as oil and gas) and that they also do not harvest natural resources (such as hydropower, wind power, fisheries, and forestry),” Cermaq said. “Aquaculture operators put their own smolt into the sea, feed it to adult size, and take it out of the sea again before processing it into a salable food product.”
Even now that it is law, Salmar said the government has not yet clarified how the tax will be implemented.
“Nobody yet knows what structure the tax will have, and the Storting will not have any proposal to deal with until the spring of 2023 at the earliest,” SalMar said.
With the details still be to be worked out, the looming tax increase is having real effects on salmon companies who are grappling with an uncertain contract market in 2023, Cermaq said. All of Norway's large salmon-farming firms have said predictable business conditions are essential for them to commit to further investments in the industry in Norway.
“For buyers who invest in Norwegian farming, it typically takes 10 to20 years of profits form the business before the investments can be expected to be repaid and provide positive cash flow to the owners,” Cermaq said. “When the state chooses to sell permits and farming activities, the state must ensure confidence in predictable framework conditions. This is not the case with today’s proposal.”
Photo courtesy of Cermaq
