TORONTO (miningweekly.com) – With several Canadian miners embroiled in acrimonious standoffs with the Canadian Revenue Agency (CRA) regarding transfer pricing rules, mining companies will have to come to terms with increased levels of uncertainty in their tax profiles and will need to consider the impact of all changes, not only on existing structures but also on new investments and transactions.
Since the CRA first introduced transfer pricing rules in 1998 to counteract base erosion and profit shifting (BEPS), various Canadian resource firms have been singled out for their purported aggressive tax planning and alleged tax evasion schemes.
Among the high-profile miners that have filed pleadings with the Canadian Tax Court are Cameco, Silver Wheaton, Burlington Resources, Conoco Funding Company and Suncor Energy. Cameco’s case is the only one that has started hearings.
According to Fasken Martineau partner in the tax practice group Jenny Mboutsiadis, the CRA becomes concerned about transfer prices when multinational enterprises (MNEs) use transfer prices to shift profits from high tax jurisdictions to lower tax jurisdictions.
“The CRA has been sharpening its assessments of transfer pricing in the last six years, resulting in several MNEs [having their earnings] reassessed and [given] penalties,” Mboutsiadis said during a briefing in Toronto on Friday.
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