CAMECO - Middleman - Tax Man!

[Oscar]

Ottawa accuses Cameco of multi-million dollar tax dodge

[ http://www.cbc.ca/news/canada/saskatche ... -1.1860079 ]

Saskatchewan may have missed out on $300M in corporate tax

By Geoff Leo, CBC News Posted: Sep 19, 2013 5:51 AM CT
Last Updated: Sep 19, 2013 12:01 PM CT

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.

Pricing agreement

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.

Since that time, the price of uranium has soared reaching a high of almost $140 US per pound in 2007.

In recent days, it's been hovering around $35 US per pound.

This means Cameco Switzerland buys uranium from Cameco Canada at the low price of $10 US per pound and then sells on the world market at $35 US per pound.

"So in effect they are booking profits in the Swiss subsidiary and not realizing those profits here at home," Rajszel concludes.

However, Cameco argues that the agreement signed with its Swiss operation was based on market prices at the time and is therefore legitimate.

"In other words, they are prices that an independent third party would agree to," Grant Isaac said.

However, Rajszel doubts that claim.

He says in this arrangement Cameco Canada, the parent company, guarantees the performance of Cameco's Swiss subsidiary.

"In other words, all the upside has been transferred to the subsidiary," Rajszel explained. "Meanwhile all the risk has stayed with Cameco Canada."

Saskatchewan's stake

The $800-850 million potentially owed by Cameco includes both federal and provincial corporate tax dollars.

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- Cameco Canada mines uranium and sells it to Cameco Switzerland at the 1999 price. The uranium never physically travels through Switzerland.

- Cameco Switzerland processes the paper to sell uranium at market price to customers around the world.

- The profits are recorded and taxes paid in Switzerland.

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The uranium is shipped from Canada to Cameco's customers.

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[ http://www.cbc.ca/news/canada/saskatche ... -1.1860079 ]

[Oscar]

2011 - Leaking uranium ship in "Nuclear Free" port

[ http://vancouver.mediacoop.ca/photo/lea ... -port/5741 ]

by murray bush - flux photo January 21, 2011

VANCOUVER - The MCP Altona is docked at Ballantyne Pier in "Nuclear Free" Vancouver after the crew noticed leaking uranium concentrate in the hold of the vessel.

The Ladysmith Chronicle has been monitoring the cargo ship since it left the Ladysmith/Chemainus area. The paper reported that Cameco, which produced and was shipping the uranium to China, now admits that at least four drums of uranium concentrate spilled during heavy seas. The ship returned to BC after the storm west of Hawaii.

Saskatchewan-based Cameco issued a press release yesterday stating that "the MCP Altona has docked at the Port of Vancouver to replenish fuel and supplies. Cameco is working with government agencies to finalize plans for a full remediation of the ship's hold and determine the location where this will occur."

The release went on to say that "all the uranium remains safely confined within the ship's hold and the hold will remain sealed and locked until remediation activities commence."

Earlier in the week, Cameco admitted that "It now appears a number of the sea containers that held drums of uranium concentrate have been damaged and our team has confirmed there is some loose uranium in the hold."

The ship, meanwhile, is berthed at the foot of Hawks Avenue, a stone's throw from the Downtown Eastside and Strathcona residential neighbourhoods.

In the early 1980s, Vancouver City Council delclared the city a "Nuclear Weapons Free Zone."

[Oscar]

COMMENT: tax evading company subsidized with OUR money - in Kazakhstan

From: Mike Bray <msbray@sasktel.net>
Date: November 17, 2013 9:10:52 PM CST
To: thomas.mulcair@parl.gc.ca
Cc: elizabeth.May@parl.gc.ca, Justin Trudeau <info@email.liberal.ca>

Subject: tax evading company subsidized with OUR money- in Kazakhstan


Why is Harper using OUR money to subsidize a company that the CRA says owes $850 Million in taxes?

I want answers from the government and the opposition to do their job also.

Mike Bray
Indian Head, SK

[Oscar]

Cameco vs. the taxman: The squabble that keeps on growing

[ http://www.theglobeandmail.com/globe-in ... e18989010/ ]

DAVID MILSTEAD Special to The Globe and Mail
Published Wednesday, Jun. 04 2014, 7:07 PM EDT

Uranium prices have been on the downswing. That has challenged the earnings of Saskatoon-based Cameco Corp., one of the world’s biggest sellers of the product.

One thing that’s getting bigger, however, is the size of the company’s squabble with the Canada Revenue Agency over its income tax bill. It’s a dispute that Cameco increasingly needs to win, for its shareholders’ sake.

We first wrote about the matter just a year ago. < http://ece5studio1.colo.theglobeandmail ... 1105956230 > To review: In 1999, Cameco set up a subsidiary, Cameco Europe Ltd., in low-tax Zug, Switzerland. Cameco then signed a 17-year deal to take the uranium it produces in Canada and sell it to Cameco Europe before it made its way to the end customer.

By injecting a middleman into the transaction, Cameco is able to sell the uranium to Cameco Europe at the low prices reflective of 1999. As a result, Cameco is recording little to no profit in Canada. Instead, all the profits appear in Zug, where the tax rate is lower.

A year ago, Cameco estimated it had avoided declaring $4.9-billion in Canadian income, saving it $1.4-billion in taxes, over 10 years. The company’s latest disclosure, accompanying its first-quarter earnings in late April, now show the numbers have grown to $5.7-billion in income it was able to avoid declaring, and $1.6-billion in tax savings for the 11 years ended in 2013. The tax-saving deal runs through 2016, so the numbers could continue to grow.

The scope of the dispute wasn’t terribly clear until a year ago, because Cameco was using accumulated losses to cover the assessments CRA was making. The agency requires large corporations to remit 50 per cent of the disputed tax bill, as well as half of the interest and penalties, until the matter is decided. So, prior to 2013, Cameco submitted just $13-million to the taxman. The number grew to $46-million last year, and has been $58-million so far in 2014. Cameco now estimates it may have to submit somewhere between $625-million and $650-million to cover the disputed tax bills through 2013.

Cameco, it should be said, believes it has done its taxes properly and expects to prevail in the CRA court case and get all its money back. “We continue to believe the ultimate resolution of this matter will not be material to our financial position, results of operations and cash flows in the year(s) of resolution,” the company said in its updated disclosure in April.

The analysts at Veritas Investment Research are not so sure. The dispute is twofold. The CRA is disputing both the corporate structure of the arrangement, saying it exists only for tax avoidance, and has no real business purpose. CRA also contests the prices used in the deal. Cameco needs to win on both to prevail.

While Cameco says Cameco Europe has its own board of directors and a full-time CEO, documents in the case reveal the European company had no other full-time employees, and no stand-alone office, instead renting space from the law firm performing its legal work. Cameco’s Canadian employees performed nearly all the functions for Cameco Europe. “It is therefore difficult to see a reasonable business purpose to [Cameco Europe’s] existence, beyond tax minimization,” Veritas’ Pawel Rajszel and Dimitry Khmelnitsky say in their recent report.

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[ http://www.theglobeandmail.com/globe-in ... e18989010/ ]