http://www.cbc.ca/saskatchewan/
Saskatchewan may have missed out on $300M in corporate tax
One of the largest companies in Saskatchewan is in the midst of a multi-million dollar tax court battle with Canada Revenue Agency (CRA). Cameco has publicly estimated that it could end up owing $800-850 million in Canadian corporate taxes for the years 2008 to 2012, if it loses the case.
CRA contends that the uranium giant set up a subsidiary in Zug, Switzerland for the purpose of avoiding taxes in Canada. However Cameco’s CFO, Grant Isaac, disputes that claim.
He says there’s a compelling business case for having a marketing arm in Europe, close to customers there. “We believe that it was established in accordance with sound business principles and in accordance with relevant laws and regulations,” Isaac told investors at the corporation’s first quarter update in May 2013.
Cameco Switzerland
The Swiss subsidiary was created in 1999 in the low tax jurisdiction of Zug, Switzerland, a well-known tax haven.
Pawel Rajszel, an analyst with Veritas Investment Research in Toronto, estimates Cameco’s corporate tax rate in Switzerland at about 10 per cent compared to a Canadian rate of at least 27 per cent. Rajszel questions Cameco’s need for the Swiss operation.
“It’s strange that the company would have created this Swiss subsidiary without having any real operations in Switzerland,” Rajszel said.
He says from his research, virtually all of the mining, marketing, and management functions of the company are in Canada, while the operation in Switzerland merely does some paperwork.
“So effectively the company is outsourcing the profits to Switzerland to pay the lower Swiss tax and avoiding the higher Canadian corporate tax rate,” Rajszel said.
In 1999, Cameco Canada signed a 17-year agreement with its Swiss arm to sell uranium at the fixed price of about $10 US per pound.
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