Cameco notes IRS dispute over American taxes

Cameco, the uraniummining company, has disclosed that it is currently involved in a tax dispute with the United States. The company says the dispute involves a "complex area of tax law" adding the amount at issue will not make a material difference to its financial statements.

The company referenced the dispute with the IRS in its 2014 Financial Results released Feb. 6.

The document indicates the IRS has taken issue with taxes paid in 2009 and that American authorities are also looking at Cameco's tax returns for 2010 through 2012.

"We believe that the conclusions of the IRS in the NOPA [notice of proposed adjustment] are incorrect and we plan to contest them in an administrative appeal," the company said in its financial statements.

Cameco also described, in general terms, the nature of the dispute:

"The current position of the IRS is that a portion of the non-US income reported under our corporate structure and taxed in non-US jurisdictions should be recognized and taxed in the US on the basis that:

• the prices received by our US mining subsidiaries for the sale of uranium to CEL [Cameco Europe Limited] are too low
• the compensation being earned by Cameco Inc., one of our US subsidiaries, is inadequate.

According to Cameco, the IRS is seeking an additional $32 million in taxes, plus interest. The company said the IRS may also seek penalties. Figures in the financial statements are reported in Canadian dollars.

Cameco said the tax issue is complicated but has to do with a marketing and trading structure involving foreign subsidiaries.

Canadian tax authorities have been seeking adjustments from Cameco as well, which the company has been reporting since 2008. Canada's revenue officials are looking for much larger amounts and the issues, while similar, are different in each jurisdiction.

• Ottawa accuses Cameco of multi-million dollar tax dodge

"We estimate that cash taxes and transfer pricing penalties for these years [2003 through 2014] would be between $1.45 billion and $1.5 billion," the company said in its 2014 statement, in reference to the Canadian tax dispute.

Cameco said the Canadian tax issue is before the courts and may not be finally resolved until 2016 or 2017 but it expects to prevail.

"We are confident that we will be successful in our case," the company said.

The company added it was ready to pay a total of $85 million to Canada because "an argument could be made that our transfer price may have fallen outside of an appropriate range."

The dispute with the IRS was in the early stages, the company said.