SASKATOON — Cameco Corp. says the Canada Revenue Agency is appealing a Tax Court decision that was in the company’s favour.
The Saskatoon-based uranium miner estimates it will take about two years for the Federal Court of Appeal to hear and decide the case.
Last month, Cameco says the Tax Court ruled its favour in the case which centred around its use of a subsidiary in Switzerland to sell and trade its uranium.
The CRA contended it was a sham established to avoid Canadian taxes, while Cameco maintained it was for legal and sound business practices.
Despite the CRA appeal, Cameco says it will be making an application to the court to recover costs incurred over the course of this case.
Cameco noted that decisions of the Federal Court of Appeal may be appealed to the Supreme Court of Canada, if the top court agrees to hear the appeal.
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Cameco Corp. says it is “disappointed” that the Canada Revenue Agency chose to appeal a month-old decision that found the company does not have to pay back taxes on $483 million in revenue earned in 2003, 2005 and 2006.
“We hope to have a reasoned discussion with the CRA to see if we can reach a resolution for all years based on the principles laid out in the ruling,” Tim Gitzel, the company’s CEO, said in a statement.
The federal government agency’s appeal is the latest development in its long-running dispute with the Saskatoon-based uranium miner over billions of dollars earned by its European subsidiary over the last 15 years.
In a 293-page decision handed down last month, Tax Court of Canada Justice John Owen ruled that the company was within its rights to use Cameco Europe Limited to report uranium sales earnings in low-tax Switzerland.
Cameco called Owen’s decision a “vindication” of its view that the practice was legal and sound, and suggested it should be applied to the other tax years in question. CRA has issued reassessments for 2003 to 2012, with more expected.
That could lead to $8.4 billion in revenue being moved back to Canada, enough to saddle Cameco with $2.5 billion in taxes and penalties.
In its notice of appeal filed on Oct. 25, the CRA said Own “erred in fact and in law” by finding that the section of the Income Tax Act covering transfer pricing, the business practice Cameco used, did not apply in this case.
In an emailed statement, CRA spokesman Paul Murphy said he was prevented from discussing “the affairs of individual taxpayers,” but noted that the agency is “committed to protecting the tax base by ensuring that all Canadians meet their tax obligations.”
The CRA’s decision is likely to please the local advocacy group Saskatchewan Citizens for Tax Fairness, which has called for an appeal and urged the federal government to close “loopholes” that benefit large corporations.
Devan Mescall, a tax expert at the University of Saskatchewan’s Edwards School of Business, told the Saskatoon StarPhoenix earlier this month that anger about the decision should be channelled into lobbying for clearer rules.
“If you change the rules, the behaviour of these corporations will change as well,” Mescall said.
“We will continue through the appeal process and expect the appeal to be decided in our favour as well,” Gitzel said in the statement, which described Owen’s decision as “clear and decisive” in the company’s favour.
The company said Friday it expects an appeal to take about two years.