Bakkafrost lays off 140 employees – blame Faroe Islands salmon tax

The Faroe Islands breeder, who is also big in Scotland, says he is cutting staff to pay taxes.

Photograph: Ida Marie Odgaard/AFP/NTB

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In contrast to Norwegian breeders, the company is exempt from ground rent tax. On the other hand, the Faroe Islands tightened the imposition of an additional excise tax.

As a result of this “salmon tax”, Packafrost adjusted its further processing strategy to reduce contract risk in 2024. Consequently, the company received advance sales of only 9 percent of the total slaughter, compared to 22 percent in the same period. Time last year.

-We hoped that we could agree a sufficient amount of long-term contracts, so that we could retain all our employees. But circumstances have changed, especially after the new income tax was imposed. We also hoped that the new political changes would come in time as promised, but unfortunately they let us down, says Backafrost CEO Regine Jacobsen in an interview. message.

As a result, 140 employees at the company’s additional processing plant will lose their jobs.

Both the Conservative Party and Sjømat Norge have asked the government to investigate alternatives to the ground rent tax, and among other things pointed to the system in the Faroe Islands.

Fact box: “Salmon tax” in the Faroe Islands

In the Faroe Islands, the aquaculture industry is subject to an excise tax on the value of gutted fish.
The fee base is the monthly weight multiplied by the average spot market price on the Fish Pool market in Bergen, that is the sales volume.
The tax rate depends on the price, if the price per kilo is less than 32 Danish kroner, the tax is 0.5 percent of the turnover. If the price per kilo is 32-36 Danish kroner, the tax is 2.5 percent of the turnover. If the price per kilo is more than 36 Danish kroner, the tax is 5 percent of the turnover.
The basis for the different price intervals is the assumed average production cost of DKK 32 per kilo piece. At today’s exchange rate, 32 Danish kroner is equivalent to about 50 Norwegian kroner.
The authority in the Faroe Islands has put forward proposals for new steps and rates from 1 August. There are modified price limits and several steps.
A new higher rate of 20 percent applies when the price exceeds DKK 79.15 per kilo (about NOK 120 per kilo).
The Faroe Islands have a population of about 53,000 and mainly three agricultural businesses.
The Faroe Islands are part of Denmark, but are internally self-governing with their own elected parliament (lagtinget) and their own government.
The Faroe Islands have a trade agreement with the European Union, but are not a member of it, although Denmark is
Fish products, whether from agriculture or fisheries, account for about 95 percent of exports and 20 percent of gross domestic product.
The fishing industry employs about 15 percent.
Total salmon farming in 2022 will be about 90 thousand tons, compared to about 1.3 million tons in Norway.

Source: Hiddenfjord and Ministry of Finance, Wikipedia, The Great Norwegian Dictionary, Faroe Islands Authorities, Norwegian Seafood Council, ICES

Loss of results

The Oslo Børs listed company reported its results last week. The operating result fell to DKK 269 million in the third quarter, from DKK 428 million at the same time a year earlier.

Our Fish Meal, Fish Oil and Feed segment had another strong quarter, but we are not satisfied with the results of our Agriculture segments this quarter,” said Regin Jacobsen, CEO of Bakkafrost.