The world’s largest publicly traded uranium company will clash in court this week with the Canadian Revenue Agency over a potential $2.2-billion tax bill.
At question is whether Saskatoon-based Cameco Corp. set up a subsidiary in low-tax Switzerland and sold it uranium at a low price simply to avoid tax, as the CRA contends. Cameco maintains it was a legal and sound business practice.
For the uranium producer the case presents a serious risk of impact to its bottom line, as the CRA looks to shift an estimated $7.4 billion in foreign earnings between 2003 and 2015 back to Canada.
Meanwhile, the government risks losing a significant direct tax windfall and a chance to set an example for the growing number of companies trying to avoid taxes by shifting profits overseas.
“There’s so much at stake,” says David Hogan, a cross-border tax specialist at financial consultancy Richter. “They need to have an example of somebody who did something wrong, and that is actually a deterrent for many more tax payers to not even bother trying.”
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