The Canada Revenue Agency is appealing a September tax court decision that ruled in favour of Cameco over the company’s use of a Switzerland-based subsidiary to sell and trade its uranium.

Cameco said it expects the case, which will be heard in the Federal Court of Appeal, to take about two years.

The Tax Court of Canada previously decided that Cameco’s marketing and trading structure involving foreign subsidiaries “are in full compliance with Canadian laws” for the tax years of 2003, 2005 and 2006, which were the subject of the case.

“We are disappointed that the CRA has taken this action after such a clear and decisive ruling from the Tax Court,” Cameco CEO Tim Gitzel said in a statement. “We will continue through the appeal process and expect the appeal to be decided in our favour as well.”

At issue is Cameco’s use of Cameco Europe Ltd, a Zug, Switzerland-based subsidiary that the company established in 1999. It signed a 17-year deal at the time to sell its Canadian uranium to Cameco Europe, which would then make the sales to its end users.

The deal allowed Cameco to sell uranium to its subsidiary at 1999 prices, and record the vast majority of its profits in Switzerland, where the tax rate is lower.

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The CRA – which reassessed the three tax years to add $43.4 million in 2003, $196.8 million in 2005 and $243 million in 2006 to Cameco’s income – argued the company’s structure was a “sham” to help it avoid paying Canadian taxes.

Justice John Owen ruled that none of the transactions or arrangements were a sham, and reversed a chunk of the CRA’s reassessments for 2005 and 2006.

The agency’s appeal does not contest the tax court’s ruling that sham does not apply, which Gitzel said the company was “pleased” with.

He said it hopes to have “a reasonable discussion with the CRA to see if we can reach a resolution for all years based on the principles laid out in the ruling.”

Cameco will make an application to recover its costs from the case despite the agency’s appeal.

The company said it expects any action regarding the tax years of 2007 to 2012, which have been reassessed by the agency, will be suspended until the existing case is resolved. Its tax years of 2013 onward have not yet been reassessed.