As of 1 January, 2023, new rates for Russia's water biological resources (WBR) tax will come into force.
Tax rates for some species, especially commercial species, will significantly increase – with harvesters of corbicula and surf clams saying they will see tax increases of as much as 990 percent and 1,620 percent, respectively.
By upping the tax, the government hopes to raise more money for regional budgets and stimulate the output of value-added products through the provision of deductions.
The WBR tax is levied on the basis of tonnage of each species caught, and the location of its capture. In the Far Eastern Fishery Basin, it will be RUB 6,400 (USD 93.34, EUR 88.13) per metric ton (MT) for cod, instead of the previous RUB 3,800 (USD 56.00, EUR 52.74); RUB 16,500 (USD 241.86, EUR 229.02) per metric ton of grenadier instead of RUB 12,600 (USD 184.16, EUR 173.74); and RUB 800 (USD 11.70, EUR 11.03) per metric ton of saury versus RUB 150 (USD 2.19, EUR 2.06). The WBR for cod from the Northern Fishery Basin will increase from RUB 5,700 (USD 83.15, EUR 74.44) to RUB 7,900 (USD 115.25, EUR 109.62).
All told, the tax for a few dozen species were increased, while those with designated status as being of high social importance – such as herring, crucian carp, vendace, and plaice – were not changed.
An explanatory note on the law enacting the new rates said the average rate is set at 4.8 percent of the price for which the producers typically sell their wares.
Overall, the initiative will be costly for companies. The whole sum of WBR tax paid by businesses will go up 20 percent to RUB 14 billion (USD 204.68 million, EUR 193.35 million), the All-Russian Association of Fishing Industry (VARPE) calculated. However, a few company categories are eligible for up to an 85 percent tax deduction.
The right to pay just 15 percent of the tax rate through 2027 will be given to coastal fishing companies if the company’s activities is deemed of critical importance for a village or township – a designation given if the company’s staff make up more than half of the population of the municipalities in which they operate.
The same discount, within the same timeframe, is also being provided to companies that invest in the renewal of fishing and processing facilities. Tax breaks will also be given to catch harvested by newly-built ships commissioned after 1 January, 2020, as well as for catch processed entirely at sea.
VARPE noted in its comment that “the tax is increased primarily for species that are being exported.”
In some cases, though, exports may cease entirely as a result of the higher taxes. A letter sent from the Primorye Region Fisheries Association to the federal government said the higher taxes made the surf clam and corbicula fisheries unprofitable. An almost identical letter was sent by Vladivostok-based company Akvatechnologii, which holds 86 percent of Russia’s quota for surf clams (517 MT in 2022) and 99 percent of its quota for corbiculas (540 MT). Both letters asked why other categories of shellfish only saw increases of 7.5 percent while their own tax rates increased exponentially.
Even with the much higher rates, due to the small size of both fisheries, the fisheries' combined tax payments will still be negligible to federal coffers, the letters said. But the new rates will result in products from the fisheries becoming uncompetitive in international markets, and will likely result in job losses, the letters said.
The letters asked for a tax rate not exceeding RUB 600 (USD 8.75, EUR 8.26) per MT – 2 percent of the current selling price of both species, and the same rate as shrimp, crab, and sea urchin.
Photo courtesy of Konstantin Baidin/Shutterstock
