One of Canada's wealthiest resource companies owes at least $200 million in taxes and it could be much more.
The Financial Post is reporting that a Canada Revenue Agency investigation found that Vancouver-based Silver Wheaton's business model is set up to avoid taxes. Many of Canada's resource companies employ complicated transfer pricing techniques to reduce "at-home" profits. As a matter of fact, Silver Wheaton's CEO says their practices are standard in the mining industry. "We remain confident in our business structure, which we believe is consistent with that typically used by Canadian companies," Randy Smallwood told the Financial Post.
Surely this is a signal to the CRA to crackdown on the mining sector.
Problem is, massive layoffs and budget cuts at the CRA have damaged its ability to follow the money. Finance Minister Joe Oliver recently reinstated some of the funding to the agency - but only a small percentage of what had been cut. "Investing in good tax investigators pays off, as this case shows," says Dennis Howlett, executive director of Canadians for Tax Fairness. "Canada loses billions every year from corporations who take advantage of the system. We need to insure that corporations pay their fair share."
Cameco is another resource company that has been investigated by the CRA. That case is expected to go to court next year with the CRA alleging that the Saskatchewan-based company avoided more than $1billion in taxes by setting up a branch office in a Swiss town notorious for its tax haven practices.