In the United States, the taxation of fish and other aquatic animals can be a complex and often misunderstood topic. While some may assume that all fish sales are subject to sales tax, there are actually several exemptions and special considerations that apply. One of the most significant exemptions is for the sale of certain living animals, including fish, mollusks, and crustaceans, when sold alive for human consumption.
The Exemption for Living Animals Sold for Human Consumption
According to the California Department of Tax and Fee Administration (CDTFA), sales tax does not apply to the sale of certain fish, mollusks, and crustaceans when sold alive. These animals are considered to be “animals of a kind the products of which ordinarily constitute food for human consumption.” This exemption is outlined in Section 6358 of the California Revenue and Taxation Code.
The specific species of fish that are exempt from sales tax when sold alive include:
Anchovies
Squid
Spanish Mackerel
Tom Cod (Kingfish)
Herring
Queenfish
Smelt
Grunion
Pompano
Various Perch
Sardines
Shrimp (Bay)
It’s important to note that this exemption applies only to the sale of these animals when they are sold alive. Once the animals are processed or sold in a different form, such as frozen or canned, they may be subject to sales tax.
The Distinction Between Section 6358 and Section 6359
While Section 6358 provides an exemption for certain living animals, Section 6359 deals with the exemption for food products intended for human consumption. The CDTFA clarifies that sales of living animals for bait purposes may qualify as sales of living animals “the products of which ordinarily constitute food for human consumption” under Section 6358, even if they do not qualify as sales of food products for human consumption under Section 6359.
This distinction is important because it means that the sale of certain living animals, such as those used for bait by deep-sea fishermen, may still be exempt from sales tax even if they are not intended for direct human consumption.
Taxation of Other Animals and Animal Products
While the sale of certain fish, mollusks, and crustaceans is exempt from sales tax when sold alive, the taxation of other animals and animal products can vary. For example:
The sale of llamas is subject to sales tax, as llamas are not considered a form of animal life the products of which ordinarily constitute food for human consumption.
The sale of nutria is not exempt, but the sale of nutria meat for human consumption is exempt from tax.
Rabbits are considered tax-exempt, as they are animals “of a kind the products of which ordinarily constitute food for human consumption,” but mice and guinea pigs are taxable.
Additionally, certain animal products, such as animal serum and red cells, are subject to sales tax because they are not considered a form of animal life used for human consumption.
Taxation of Aquaculture in Other Jurisdictions
The taxation of aquaculture varies across different jurisdictions. In Oklahoma, for example, the sale of any fish, insect, or other terrestrial or aquatic animal life for sale is exempt from sales tax.
In Denmark, aquaculture companies are subject to a special harvest tax based on the average price per kilo of salmon per month and the amount of gutted salmon produced. There is also a production fee of 0.4 NOK per kg of salmon, trout, and rainbow trout produced, which is designed as an excise duty to the Treasury.
In Texas, sales tax is due on the sale of all animals unless the purchaser provides a valid and properly completed resale or exemption certificate.
These examples illustrate the diversity of approaches to the taxation of aquaculture and fish sales across different jurisdictions.
Conclusion
In conclusion, the taxation of fish and other aquatic animals is a complex topic that varies depending on the specific circumstances and jurisdiction. While some sales may be exempt from sales tax, such as the sale of certain living animals for human consumption, other sales may be subject to tax or special fees. It’s important for businesses involved in the aquaculture industry to familiarize themselves with the relevant tax laws and regulations in their area to ensure compliance and avoid potential penalties.