The Government of Norway has proposed to introduce a new resource rent tax on aquaculture with effect from 1 January 2023.
Its proposal covers the production of salmon, trout and rainbow trout and involves the taxation of resource rent at an effective rate of 40%. A tax-free allowance of between 4,000 and 5,000 tonnes will be granted for smaller-scale producers, which applies to 65-70% of the country’s aquaculture companies.
The move could generate proceeds of between NOK 3.65 and 3.8 billion, with the intention to pass half of the revenues collected to public funds.
Announcing its proposal, the government explained that Statistics Norway had identified substantial resource rent in the aquaculture industry over several years. Resource rent in aquaculture has risen strongly since 2012 and for the period 2016 to 2018 totalled over NOK 20 billion.
With resource rent for 2021 estimated at NOK 11.8 billion, the government said it is reasonable for society to receive a share of the extraordinary return generated through the exploitation of the resources that it utilises, mainly the fjords and sea areas.
The proposal, which would need to be approved by parliament, was sent out for consultation on 28 September. Based on this, a bill will be prepared enabling the rules to apply from the 2023 tax year.
It has been calculated that the proposed tax-free allowance of between 4,000 and 5,000 tonnes is equivalent to NOK 54 to 67.5 million.
Tax-free allowances are granted in the form of estimated average profit per tonne of biomass and can be deducted from positive resource rent income. Meanwhile, corporate tax is calculated before resource rent tax on aquaculture, and resource rent-related corporate tax is deducted from the basis for resource rent tax.
An effective resource rent tax rate of 40% means that the formal resource rent tax rate is set at 51.3%. Including corporate tax, the total effective marginal tax is 62%.
While development licenses are not covered by the resource rent tax, if they are converted to ordinary licences for fish for consumption, they will be covered by the resource rent tax from the date of conversion.
