A Uranium sector-related exchange traded fund was among the best performers Thursday after the Tax Court of Canada ruled in favor of Canadian uranium producer Cameco Corp. (NYSE: CCJ) over a dispute on the reassessments the Canada Revenue Agency issued.
The Global X Uranium ETF (NYSEArca: URA), which tracks global uranium miners, was among the best performing ETFs on Friday, rising 4.3% and briefly testing its long-term resistance at the 200-day simple moving average.
The Canadian Tax Court ruled that Cameco’s marketing and trading structure, which involved “foreign subsidiaries and the related transfer pricing methodology used for certain intercompany uranium sale and purchase agreements,” where in full compliance with Canadian laws, The Motley Fool reports.
The company sells uranium to a marketing unit in Switzerland, which re-sells to buyers, incurring a lower tax rate than the company would have triggered if sold through its Canadian offices.
Refund With Interest?
Due to the tax ruling, the Minister of National Revenue will issue new reassessments for the 2003, 2005, and 2006 tax years, which could get the company to receive a refund with interest.
“It was a clear and decisive ruling in our favor. Our company has been through a lot over the last several years, so this is a great day for Cameco,” Cameco’s Chief Executive Officer, Tim Gitzel, told a conference call with financial analysts, the Financial Post reports.
Furthermore, Cameco believed the ruling could indicate that the other tax years in dispute will ultimately receive the same outcome. The firm also plans to apply for the recovery of the costs incurred during the litigation process.
“We hope CRA accepts the decision and applies it to other tax years in dispute,” Gitzel said, Reuters reports.
The ruling covers tax years where about $11 million in taxes was at stake. Any additional implications for subsequent years include some $2 billion in taxes plus interest and penalties are in question, Gitzel added.
Cameco shares surged 15.5% Thursday on the ruling. CCJ makes up 17.5% of URA’s underlying holdings.
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