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Cameco to court over tax bill

Cameco headquarters (Photo: Cameco).

Canada’s biggest uranium producer, Cameco, is set to appear in court on Wednesday to dispute accusations of setting up a subsidiary in Zug, Switzerland for the purpose of avoiding taxes.

Canada Revenue Agency contends whether the Saskatoon-based corporation wanted to dodge its fiscal duties by signing a 17-year agreement in 1999 with its Swiss arm to sell uranium at the fixed price of about US$10 per pound.

The practice is seen as ‘unfair’ given that the price of uranium rose to over US$130 a pound by 2007 and, despite the fact it has been in a steep downward trend ever since, still trades at over US$20 a pound today.

According to the CBC, the CRA is looking to shift an estimated $7.4 billion in foreign earnings between 2003 and 2015 back to Canada.

The current case, which has been moving slowly through appeals and legal motions since 2009, is dealing specifically with tax years 2003, 2005 and 2006. But the company has always said that its management had a compelling business case for having a marketing arm in Europe.

Back in 2013, Cameco’s CFO Gran Isaac told investors: “We believe that it was established in accordance with sound business principles and in accordance with relevant laws and regulations.”

Meanwhile, Cameco spokesman Gord Struthers repeated the statement in a recent email to the Canadian Press: “We followed all of the rules and paid all taxes owed under Canadian law. There is a sound business rationale for Cameco’s corporate structure and related transfer pricing arrangements and we remain confident that our position will be upheld by the court.”

The world’s number one listed uranium producer doesn’t expect the actual trial to wrap up until March 2017, with a ruling six to 18 months after that.