Dear CRA: Don't let Cameco get away with its $2.2-billion ta

Dear CRA: Don't let Cameco get away with its $2.2-billion ta

Postby Oscar » Fri Oct 28, 2016 10:50 am

Dear CRA: Don't let Cameco get away with its $2.2-billion tax evasion

[ http://rabble.ca/columnists/2016/10/dea ... ax-evasion ]

By Murray Dobbin | October 28, 2016

Cameco, the Saskatchewan-based uranium mining colossus, is currently in Federal Court facing charges by the Canada Revenue Agency (CRA) that it illegally avoided a stunning $2.2 billion in Canadian income taxes. It is not only the largest such case in Canadian history but one of the most shameless tax dodges ever hatched by a Canadian corporation. The court case has been delayed for years and just the fact that it has finally made it before a judge is good news. But the news could quickly turn bad if, facing defeat, Cameco makes a pitch to settle for less than the full amount. That would be a miscarriage of justice.

It is absolutely critical that the government not make a deal with Cameco for a smaller sum -- as often happens in these cases. Because this is no ordinary case. Cameco is a rogue corporation, contemptuous of the country it operates in, and so arrogant in its tax avoidance scheme that it can't even bother to try to justify it. Confronted by the facts, Cameco just repeats its executive mantra: "We believe that it was established in accordance with sound business principles and in accordance with relevant laws and regulations."

At a time when more and more attention is being paid to off-shore tax havens and the billions we lose to them, Canada needs to make an example of this irresponsible corporate "citizen."

How Cameco avoids taxes

Here's the bare bones of the scheme. In 1999 Cameco decided to dramatically reduce its income tax bill by setting up a subsidiary in Zug, Switzerland, where the tax rate is 10 per cent -- compared to the (then) Canadian rate of about 27 per cent. At the time the price was at rock bottom -- $10 a pound. That's the price the Saskatchewan head office charged its Swiss "subsidiary." Then came the windfall manoeuvre: Cameco drafted a 17-year uranium supply agreement at a fixed price of $10 a pound. It was simplicity itself: Cameco would sell literally all of its uranium through the Swiss subsidiary and it would sell it for whatever the world price was. That world price went to almost $140 a pound in 2007 and is now around $35. All the revenue earned above $10 a pound was taxed in Switzerland at the low rate. (An insignificant amount is actually sold in Europe and, of course, not an ounce of the stuff ever finds its way to Zug.)

This scheme is known as "transfer pricing" and sometimes it is perfectly legitimate -- companies that sell their products in multiple countries "sell" them to subsidiaries which then sell them in their jurisdiction and get taxed on the profits. But more and more multinationals have been abusing the law that allows this -- including Apple, "based" in Ireland, which is now facing a US$15-billion tax bill from the European Commission for its abuse of transfer pricing. [ http://www.forbes.com/sites/francescopp ... 35138e9d97 ]

But Apple actually sold its products in European countries and has 5,500 employees in Ireland. Cameco? Not so much. According to a 2014 Globe and Mail story: [ http://www.theglobeandmail.com/globe-in ... e18989010/ ]

"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."

Virtually all the substantive work was performed in Canada.

All of the uranium is mined in Canada, all of Cameco's sales are negotiated and completed in Canada, and literally all of its profits are generated in Canada. The company's scheme is pure scam which is why fair-tax activists in Saskatchewan call the company Scameco. A citizens' group, Saskatchewan Citizens for Tax Fairness, has been on Cameco's case for several years -- paying for a billboard demanding Cameco pay up and collecting 36,000 names on a petition which it presented to the federal government.

Growing suspicion

MORE:

[ http://rabble.ca/columnists/2016/10/dea ... ax-evasion ]
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Re: Dear CRA: Don't let Cameco get away with its $2.2-billio

Postby Oscar » Fri Oct 28, 2016 12:07 pm

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 7:07PM EDT Last updated Wednesday, Jun. 04, 2014 7:07PM 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. 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.

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[ http://www.theglobeandmail.com/globe-in ... e18989010/ ]
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Re: Dear CRA: Don't let Cameco get away with its $2.2-billio

Postby Oscar » Mon Oct 31, 2016 9:28 am

Canada needs to make an example of this $2.2-billion tax evader

[ http://rabble.ca/multimedia/2016/10/can ... tax-evader ]

By rabble staff | October 31, 2016

At a time when more and more attention is being paid to off-shore tax havens and the billions we lose to them, Canada needs to make an example of this irresponsible corporate "citizen." ("Dear CRA: Don't let Cameco get away with its $2.2-billion tax evasion" - [ http://rabble.ca/columnists/2016/10/dea ... ax-evasion ]"
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Re: Dear CRA: Don't let Cameco get away with its $2.2-billio

Postby Oscar » Thu Jul 26, 2018 8:54 am

Cameco reports net earnings of $55M in 2018 Q1

[ https://globalnews.ca/news/4172684/came ... s-2018-q1/ ]

David Giles, Senior Web Producer By David Giles

Cameco said earnings were higher when compared to the same quarter of 2017 due to restructuring and higher uranium prices.

Saskatoon-based Cameco said they are focusing on what they can control as it reported net earnings of $55 million for the first quarter of 2018.

The company said earnings were higher when compared to the same quarter of 2017 due to restructuring and higher uranium prices.

Cameco president and CEO Tim Gitzel said they were able to generate significant cash flow due to portfolio optimization and cost saving measures.

“While our average unit cost of sales was higher than a year ago, this was expected due to the care and maintenance costs incurred while production is suspended at the McArthur River and Key Lake operation,” Gitzel said in a statement.

Cameco shut down production at the two sites in January, citing market oversupply and low prices, and expects it to last 10 months.

Gitzel cautioned demand for uranium remains mixed and the company’s outlook for 2018 remains unchanged, with cash flow expected to be similar to the previous year.

“Today the market remains quiet. There are a lot of moving pieces, and utilities continue to evaluate the implications of what is perhaps best described as unprecedented noise in the political economy,” Gitzel said.

“As 2018 unfolds we will continue to evaluate the market signals, however we remain resolved in our efforts to focus on what we can control and deliver long-term value to our shareholders.”

Cameco also said it expects a decision from a judge within 12 months in its tax dispute with the Canadian Revenue Agency.

The CRA wants to shift an estimated $7.4 billion in foreign earnings between 2003 and 2015 back to Canada, which could result in a potential $2.2 billion tax bill.

~ ~ ~ ~

READ MORE: Cameco reports $62-million Q4 loss, revenue down - Feb. 10, 2018
[ https://globalnews.ca/news/4018687/came ... n-uranium/ ]

READ MORE: Layoffs begin at 2 Cameco uranium operations in northern Saskatchewan - Feb. 2, 2018
[ https://globalnews.ca/news/4002053/layo ... katchewan/ ]

Related

• Strike-lockout interrupts production at two Saskatchewan uranium facilities. Cameco shares up after Kazakhstan plans uranium production cuts - Dec. 4, 2017
[ https://globalnews.ca/news/3895724/came ... roduction/ ]

• Saskatoon-based Cameco says its goal of producing 36 million pounds of uranium a year by 2018 no longer makes sense. Cameco settles tax dispute with IRS, reports Q2 loss - July 28, 2017
[ https://globalnews.ca/news/3631629/came ... s-q2-loss/ ]
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Re: Dear CRA: Don't let Cameco get away with its $2.2-billio

Postby Oscar » Sun Sep 30, 2018 4:32 pm

Cameco says tax court has ruled in its favour in part of major CRA dispute

[ https://business.financialpost.com/pmn/ ... e-with-cra ]

The Canadian Press Ian Bickis Last Updated September 27, 2018 5:15 PM EDT

Shares in Cameco Corp. shot higher Thursday after the company said the Tax Court has ruled in its favour in part of a dispute with the Canada Revenue Agency where billions of dollars are at stake.

The case centres around Cameco’s use of a subsidiary in Switzerland to sell and trade its uranium. The CRA contends it was a sham established to avoid Canadian taxes, while Cameco has maintained it was for legal and sound business practices.

- - - - -

The ruling only covers the company’s 2003, 2005 and 2006 tax years where about $11 million in taxes is at stake, but will have implications for subsequent years where some $2 billion in taxes plus interest and penalties are in question, Gitzel said.
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Re: Dear CRA: Don't let Cameco get away with its $2.2-billio

Postby Oscar » Wed Oct 24, 2018 8:31 am

The secret world of corporate tax avoidance

[ https://www.theglobeandmail.com/busines ... dance/#_=_ ]

Allan Lanthier Special to The Globe and Mail Published October 17, 2018 Updated October 17, 2018

Allan Lanthier is a former chair of the Canadian Tax Foundation, and a retired partner of Ernst & Young.

EXCERPT:

Double-dips are only the tip of the iceberg. There are many other tax strategies that allow the transfer of deductible expenses to Canada and of Canadian profits offshore, often involving group companies established in tax havens. Cameco Corp. – a second recent decision – provides an example of one such strategy.

Cameco, headquartered in Saskatoon, is one of the world’s largest producers of uranium. In the late 1990s, Cameco developed a transfer pricing scheme to shift profits out of Canada – a strategy that ultimately included subsidiaries in Barbados, Ireland, Luxembourg and Switzerland.

Further to a number of intragroup and third-party agreements for the purchase and sale of uranium, Cameco’s Swiss subsidiary earned substantial profits – $8.4-billion for the years 2003 to 2017. There were only two employees in Switzerland: Most of the required business and management support was provided by Cameco. Cameco also provided financing to its Swiss subsidiary, and guaranteed its performance under the third-party agreements for the purchase of uranium.

The CRA issued assessments for the years 2003 to 2012, and is expected to issue similar assessments for the remaining years to 2017. The Canadian tax on the disputed amounts totals $2.5-billion for all years, before interest and penalties. The CRA’s position is that, under either the concept of sham or Canadian transfer pricing rules, all of the Swiss profits are taxable in Canada.

The first three years in dispute went to trial and, in a massive 293-page decision issued last month, the court found unequivocally in favour of Cameco: It ordered the CRA to reverse the assessments in their entirety. The court stated in part that the Swiss subsidiary was exposed to price risk associated with its ownership of uranium and that, under transfer pricing rules, it was entitled to compensation for that risk. The facts that the subsidiary did not have the financial resources to support the risk, and that it relied on its parent company Cameco for that purpose, did not change the court’s conclusion.

So, do large Canadian corporations avoid billions of dollars of taxes each year? You bet they do. And other taxpayers – you and I – have to ante up the shortfall. Canadian tax rules are in desperate need of repair. If the federal Department of Finance is not up to the task, the government should appoint a fair-minded and non-partisan group of tax experts to do the work.
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