Norwegian salmon producer Nova Sea will not renew the contracts for 18 employees, citing the potential impact of the government's aquaculture "ground rent" tax proposal.
Nova Sea's announcement comes soon after farming giants Leroy Seafood and SalMar warned of mass layoffs at their companies because of uncertainty caused by the tax proposal.
"We cannot maintain our processing activity," Nova Sea Managing Director Tom Eirik Aasjord said of the move. "We are very concerned that we are now losing competent labor."
Nova Sea highlighted the uncertainty surrounding the so-called "standard price" for salmon in the government tax proposal, which is currently based on spot market prices, which can fluctuate wildly. A significant volume of Norway's salmon is sold on fixed-term contracts, which are set at a lower price.
- Basic interest tax is designed as a cash flow tax, which means that income and investments are taxed continuously in the year they are earned or incurred.
- Income from salmon sales is determined on the basis of a standard price. This standard price is determined on the basis of the so-called Nasdaq price.
- The Ministry of Finance wrote in its "ground rent" tax proposal that salmon producers often control large parts of the value chain, and that the use of a standard price "provides less opportunity for tax-motivated adjustments than actual prices."
- Income from fjord trout and steelhead/rainbow trout is based on actual sales prices since there are no exchange prices for those species
- Several salmon farmers say the standard price makes the risk of entering into contracts enormous, since they may risk being taxed far more than they actually earn if spot prices rise above the contract price. Therefore, they avoid entering into long contracts
Nova Sea, which is partially owned by Mowi, the world's largest salmon farmer, has not entered into any fixed-price contracts following the launch of the proposal, Communications Manager Trud Berg told IntraFish.
Nova Sea earlier announced it is putting the construction of a new NOK 3.3 billion (€314 million/$307 million) processing plant and hatchery on hold following introduction of the tax proposal.
The tax proposal, news of which first broke at the end of September, could mean a 40 percent tax increase on salmon sales based on a market spot price.
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