Activists urge appeal of Cameco ruling
A group of local activists is calling on the Canada Revenue Agency to appeal a judgment that found Cameco Corp. acted within the law and does not have to pay back taxes on $483 million earned by its European subsidiary more than a decade ago.
In an open letter issued Wednesday, Saskatchewan Citizens for Tax Fairness — which has long sided with the CRA in its multibilliondollar dispute with the Saskatoonbased uranium miner — said allowing Cameco to use tax “loopholes” is a “great loss.”
“A ruling that does not challenge this practice will set a precedent not only for Cameco to continue to stow billions out of country, but others will follow suit. This undermines the well-being of Canadian citizens, and our economy,” the letter states.
Cameco disputes that assertion. Company spokeswoman Cary Hyndman said Cameco “complied with the spirit and the letter of the law,” and that its money is not “sitting offshore” but invested in its Saskatchewan operations, local infrastructure and communities.
The letter comes one week after Tax Court of Canada Justice John R. Owen issued his 293-page decision, the latest development in the CRA’S attempt to move $4.1 billion earned by Cameco Europe Limited (CEL) between 2003 and 2012 back to Canada. In the decision, Owen sided with the company and ordered the CRA to revise its reassessments for three of the years in question, 2003, 2005 and 2006 — a decision Cameco CEO Tim Gitzel described as a “vindication” of the company and its position.”
Saskatchewan Citizens for Tax Fairness spokesman Don Kossick, one of the signatories to the letter, acknowledged the decision but said the amount of money at stake means the CRA should take the case to the Federal Court of Appeal.
“This may be the time that (the federal government) could take a stand and say, ‘Look, this is not right. This kind of judgment works against the idea that there be tax fairness,’” Kossick said.
In an emailed statement, CRA spokesperson Etienne Biram noted that the agency has until Oct. 26 to file an appeal.
Hyndman said Cameco has no information about an appeal.
“We hope CRA accepts the decision and applies it to other years in dispute, and we believe there is nothing in the decision that would warrant a different outcome for the other tax years in question,” Hyndman wrote in an email.
The dispute hinges on the CRA’S allegation that Cameco used a business practice known as transfer pricing — the sale of goods between arms of the same corporation — to unfairly report profits from uranium sales in low-tax Switzerland.
While Cameco maintains that it did nothing wrong, the company has said it expects more reassessments, for a total of $8.4 billion in disputed income — enough to saddle it with an estimated $2.5 billion in back taxes and penalties.
Devan Mescall, a corporate tax expert at the University of Saskatchewan’s Edwards School of Business, said transfer pricing can often lead to differences of opinion, as it requires decisions to be made based on assumptions about prices in the future.
Anger about the decision should not be focused on Cameco, but instead channelled into lobbying for tax rules that “provide less uncertainty and more clarity” when it comes to practices like transfer pricing, he said. “If you change the rules, the behaviour of these corporations will change as well.”