Cameco tax case is scary for Barbados!

Canada Revenue Agency Barbados

How a Canadian company avoided 1.4 billion in taxes by using an offshore subsidiary and what it means for Barbados

by Not Taken

Yet another interesting and scary for Barbados article in the business section of a major Canadian newspaper, The Globe and Mail: Cameco’s $800-million tax battle

I have been sending these recent articles as a public service so the Ministry of Finance and the Barbados Central Bank Governor have a heads up on the attack on Canadian tax evaders/avoiders that is undoubtedly about to hit the Barbados offshore industry; if in fact it has not already hit – but unreported.

This is very bad news for Barbados revenue sources.

While the Cameco case involves its Swiss subsidiary, it is probably just the tip of the iceberg in CRA’s efforts to collect taxes due to Canada. There must be hundreds, if not thousands, of  “Canadaco (Barbados) Limited” businesses doing the same same transfer pricing schemes (scams) in order to pay 2% income tax to Barbados, rather than 27% to Canada.

Even those Canadian companies not not already being audited for this this type of tax “management” may decide for close up shop in Barbados to avoid the publicity that a CRA audit will bring.

Cameco’s CFO, retorts that Cameco Europe has its own board of directors and a full-time CEO, Gerhard Glattes, who has no other duties with the company. Cameco Europe provides Cameco with compensation for the management duties – like legal advice – it does not have its own staff for. “It was established in accordance with all relevant laws and regulations when it was set up.”

The Barbados registered Canadaco subsidiaries’ own boards of directors and full-time CEOs who have no other duties with the Canadian company should start planning for alternative sources of income. And of course it will have serious implications for the Barbados services providers; the legal community,  the management/bookkeeping companies, and the accountants when it happens.



Filed under Barbados, Business & Banking, Canada, Economy, Offshore Investments

13 responses to “Cameco tax case is scary for Barbados!

  1. Peter Quinlan

    This is a drop in the bucket actually. Canadians have (unbelievably) more than $57 BILLION Cdn $ (same as US $) in Barbados “accounts” (much, much more than Cayman Islands and/or Bermuda). Fact is, Barbados is by far the biggest off shore Tax Haven for Canadians & so long as the present political regime remains in place I can’t see this changing anytime soon. Say what you will but Tourism is way behind the banking industry in terms of importance to Canadians vacationing in Barbados. If this ever changed many Canadians would cease to vacation (or own property) there. Move on to another story please.
    Peter Quinlan (Newfoundland )

  2. Marvin Bareback

    The vast majority of that 50+ billion is owned by the foreign subsidiaries of the major Canadian banks who have treasury operations here, notably CIBC. The moves by the Canada Revenue Agency (CRA) to attack these structures is very bad news for Barbados indeed. This is because their typical action is to investigate and then make a drastic assessment of the tax liability. The taxpayer has to pay the assessment before an appeal is heard and these can take many, many years. However, even if the taxpayer wins their “tax” case, they have to pay their own legal fees to do so. The net effect for the CRA is that it scares anyone else away from attempting the same tax strategy as no rational CEO/CFO would want to court a costly battle with the government tax man……

  3. sith

    And all this is on top of the recent “john doe summons” 6 days ago – CIBC and Wells Fargo Banks investigation by US Department of Justice … This John Doe summons directs Wells Fargo to produce records identifying … FCIB is based in Barbados and has branches in 18 Caribbean countries. …. and …4 days ago the state of California authorised the IRS to serve “John Doe” summons seeking information about US taxpayers who may hold offshore accounts in the Barbados-headquartered bank.

  4. The Oracle

    The huge benefit to Barbadians from the many expats including Canadians who own palatial homes here, is the day the expats decide to leave Barbados for whatever reason their homes will definitely stay and Bajans will own mansions for cents on the dollar.

  5. Bajan Abroad

    Oracle – lets hope Barbados finds another source of income before that happens. The only way they will leave is because of crime or the investment climate changes.

  6. Well Well

    Oracle……………will not happen, just like sales of hotels, the homes will be sold to someone in North America or Europe, no one in Bim will ever own it neither will the money ever touch the island….these guys plan ahead.

  7. Well Well

    That is like having the rug pulled out from under ya………….

  8. The Oracle

    Governments all over the world have removed tax havens and now they all pool their information…banks have fallen in line to facilitate that too. Cash will soon disappear, all the signs are there its on the way out. Folks, don’t say “Can’t happen” coz it most definitely can and in many cases, IS happening. Anytime a Government feels like it, a law can be enacted to permit their preferred course of action…such as mandating that all property transactions relating to resident property MUST be transacted in the property’s domicile. No amount of planning can change that. I bet the depositors in the Cyprus banks thought their deposits were safe from predatory Government action…I also bet you think your deposits are safe too, don’cha? LOL.

  9. Well Well

    Oracle…………….by the time the government get around to realizing that they could actually mandate that sales of properties on the island should be transacted in the property’s domicile……………….those properties will be sold to multiple buyers around the globe and change hands any number of times……………you can wish, but don’t be disappointed .

  10. Twis

    You are all missing the most important part of Oracle’s original post. If Mansions are selling for pennies on the dollar then that will all trickle down and real estate market as a whole will suffer. If I sell a $3M mansion for $1M that means all I can get for it is $1M. You are fooling yourself if you do not think that sellers will work to maximize their selling price and are generally indifferent about if they are selling to another Canadian/American/European or a Barbadian. So the person who today has a $1M house is competing to sell it in a market where a house 3 times the size / value is for sale at the same price, so his $1M home is now only worth $500K. Guess what happens next, the house worth $500K is now worth only $300K and so on.

    But what else is happening? If those Off Shore folks are packing it in, the Barbados Government is losing the sector that is the largest contributor in taxes paid to them, taxes that they had to spend almost nothing to earn.

    The typical Barbadian will suffer as the government has less money to spend on schools, roads, hospitals etc. with no real reduction in demand. So what do they do, reduce services or increase taxes?

    There is only downside for Barbados and Bajans in this.


  11. There are really two types of “offshore haven” one is where an individual keeps their money in an account of investment fund, away from his home countries tax regime, like Cayman Islands, Switzerland, Jersey etc. etc. and we do not currently compete there in that “service”. The second is where a country allows a company to register in that country and which specially encourages this by charging very low corporation taxes. This is of course very good for the owners of the company and the offshore country (jobs mostly) but not so good for the country where most of the business is going on in, as they miss out.

    Where governments have to compete for business or people to go there and live things will generally be better. Think about it, suppose you could go and live anywhere and take all your money. The best countries would have all the people trying to live there, low tax, great food, cheap medical whatever. But when governments act in concert, in a cartel and you have nowhere to run that is when you have the real trouble.

    Getting the balance right is the challenge.

  12. Anonymous


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