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.

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.