CRA Dispute

Since 2008, CRA has disputed our corporate structure and the related transfer pricing methodology we used for certain intercompany uranium sale and purchase agreements.

We have been reporting on our transfer pricing dispute with CRA since 2008, when it originated. Below, we discuss the general nature of transfer pricing and, more specifically, the ongoing dispute we have.

Transfer pricing is a complex area of tax law, and it is difficult to predict the outcome of cases like ours. However, tax authorities generally test two things:

  • the governance (structure) of the corporate entities involved in the transactions
  • the price at which goods and services are sold by one member of a corporate group to another

We have a global customer base and we established a marketing and trading structure involving foreign subsidiaries, including Cameco Europe Limited (CEL), which entered into various intercompany arrangements, including purchase and sale agreements, as well as uranium purchase and sale agreements with third parties. Cameco and its subsidiaries made reasonable efforts to put arm’s-length transfer pricing arrangements in place, and these arrangements expose the parties to the risks and rewards accruing to them under these contracts.

The intercompany contract prices are generally comparable to those established in comparable contracts between arm’s-length parties entered into at that time.

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Questions and answers:

Where are the billions claimed by Canada Revenue Agency?


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Substantial profits earned by Cameco in the period from 2003 to 2015 were reinvested in our Canadian operations creating long-term employment and opportunity for Canadian people. During those years, we paid salaries and benefits totalling more than $3.9 billion to our Canadian employees. We paid more than $8 billion to Canadian vendors for goods and services at our Canadian operations, employing thousands of additional people and generating additional business and income tax revenues for governments. We also paid many more millions in non-income taxes and fees to all levels of government including royalties totalling $981.4 million in Saskatchewan.

In total, Cameco invested more than $13 billion in our Canadian operations during the tax years being reassessed by Canada Revenue Agency. By conservative multipliers, the economic benefit generated by that investment is estimated at $20 billion for Canada’s economy, much of it northern Saskatchewan.

Is Cameco evading Canadian taxes?

Cameco has followed all of the rules and paid all taxes owed under the laws of Canada and other jurisdictions. The corporate structure and transfer pricing arrangements applied by Cameco are commonly used by other multinational companies in Canada and were acceptable to Canada Revenue Agency for a number of years. When prices for our products began to improve after 2003, Cameco’s business began generating substantial profits that were largely reinvested in our Canadian operations. Canada Revenue Agency began reassessing our returns, starting with our 2003 tax year, in 2008. They now claim we owe an additional $1.1 billion in taxes for the period 2003 – 2010. We disagree with their position and are challenging the reassessments. We pride ourselves on being an ethical company and are confident that we will be successful in our case.

What is the status of your Canadian tax dispute?

In 2008 Canada Revenue Agency began to dispute the offshore marketing company structure and related transfer pricing methodology we used for certain intercompany uranium sale and purchase agreements, and issued notices of reassessment for our 2003 through 2010 tax returns. Cameco has appealed the reassessments for the 2003, 2005 and 2006 tax years. Our appeal began in the Tax Court of Canada starting in October 2016. Final arguments are expected in the second half of 2017 and we anticipate a decision six to 18 months after completion of the trial.

Cameco has filed a Notice of Objection for the 2004 reassessment which is sitting with CRA appeals. No court appeal has yet been filed for 2004 as CRA has not responded to Cameco’s Notice of Objection. For taxation years 2007 through 2010, we are still pursuing administrative appeals and have not yet filed an appeal with the Tax Court.

How much Canadian corporate income tax did you actually pay from 1999 to 2015?

Given Cameco’s goals and objectives during that time, Cameco had more expenses than revenues in this period and, as such, did not pay significant cash income taxes in these years.

What will happen to Cameco if you lose?

We would be required to pay additional taxes under CRA’s reassessments for the 2003, 2005 and 2006 tax years which are being appealed in the tax court now. The court’s ruling will have to be applied to other years in dispute which may be a complex process, further complicated by potential appeals. ​

What is the worst case scenario for Cameco?

Using the methodology we believe the CRA will continue to apply, and assuming they were successful in this matter, over time we would be required to pay cash taxes and transfer pricing penalties of between $1.5 billion and $1.7 billion, plus interest and instalment penalties. These payments cover the period 2003 to 2015.

While in dispute, we would be required to pay or secure 50% of the cash taxes and transfer pricing penalties (between $750 million and $850 million) plus any related interest and instalment penalties, which would be material. To date, we have paid $264 million in cash, and provided $340 million in letters of credit.

Cameco is a strong company with a healthy balance sheet and we can manage all possible outcomes of our tax disputes. We are confident we will be successful in our case, and any amounts remitted to or secured, including the amounts noted above, will be recovered.