Special tax on aquaculture industry in the Faroe Islands set at 12 percent

The special tax on the aquaculture industry will be set at 12 percent instead of the initially proposed 8 percent by the ruling coalition and the Sambandsflokkurin.

Ruth Vang, the Minister of Finance, has submitted a proposal for the additional tax on aquaculture to the parliament. According to an agreement dated March 26, the coalition parties and Sambandsflokkurin had initially agreed that aquaculture companies would be subject to an additional tax of 8 percent on taxable income derived from activities “ranging from smolt production to seafood harvesting and processing.”

The proposal for the special tax was meant to be introduced in parliament by October at the latest to ensure implementation by the New Year.

However, upon its introduction, the special tax is now set at 12 percent. Additionally, the wording in the agreement has been amended.

In Article 30 of the proposed legislation, it states that “income from commercial aquaculture in the Faroe Islands will be subject to an additional tax of 12 percent on taxable income arising from fish farming at sea.”

Section 2 of the same article specifies that the taxable income does not include income from:

– Production of fishmeal, fish oil, and aquafeed
– Smolt production
– Seafood harvesting
– Aquaculture service vessels
– Scrapping
– Value-added production activities

According to the notes accompanying the legislative proposal, the additional tax is expected to generate between 80 and 100 million kroner annually. The tax will take effect on January 1, 2025, meaning the first revenue will be collected in 2026.