JEDDAH, 20 May — Saudi businessman Harb Al-Zuhair has denounced the French authorities for suing him for allegedly dodging tax payments on his assets worldwide and said the move was a flagrant violation of an agreement between Riyadh and Paris on double taxation.
“I have produced every evidence to prove that I am a Saudi citizen permanently settled in Saudi Arabia and that I’m subject to its zakah system. But the French authorities wanted to levy taxes on all my income and businesses in the Kingdom,” said Al-Zuhair, chairman of Harb Al-Zuhair Group of Companies.
The French tax authorities have filed a lawsuit against Al-Zuhair, demanding 80 million francs in tax for conducting business activities from France from 1996 to 1998. A French court is now looking into the case.
Al-Zuhair said he considered the French move “an attack on him to grab his money in an unjust and unfair manner.” He also described the action as a violation of human rights. Al-Zuhair has already lost two million francs in the legal battle. Most of the money was spent on French lawyers who charged him “exorbitant fees”.
He urged the Saudi government to act vigorously to protect the rights of its citizens abroad and defend its international reputation. “I have heard from a French lawyer that the tax authorities in France would not take any documents attested by Saudi agencies seriously. This is a flagrant attack on our country,” Al-Zuhair added.
He called for a review of the bilateral double taxation agreement to remove all the loopholes that might be exploited by the French tax authorities. “I am saying all this because every Saudi who owns properties or businesses in France could be subjected to similar harassment by the French tax authorities, whenever they feel so and when they receive any complaints against a Saudi visitor,” he said.
The Saudi businessman said the French tax authorities have been harassing him for the past three years. Muhammad Ziad Al-Zuhair, his office director, said Al-Zuhair was very upset by the French action, and hinted that he would curtail his visits to France so that its tax authorities would not find any fresh reasons to harass him.
Al-Zuhair pointed out that his group of companies has vital ties with many French firms and was procuring them business worth millions of riyals in Saudi Arabia and other Gulf states.
The French authorities moved the court against Al-Zuhair on the grounds that he stayed in France and owned a house in Larressore in the southwest of the country since 1987. They also claimed that he managed his businesses in Saudi Arabia from France and had bank accounts in France. Al-Zuhair has a substantial stake in a French-Arab bank named SBA, established 20 years ago in Paris. “I don’t have any business in France and I pay tax for my real estate properties in France and for the SBA share,” he said.
“I don’t see any reason for the French tax authorities to run after me as I am a Saudi citizen living and doing business in Saudi Arabia, and I am subject to Saudi taxation rules,” he explained. “I don’t know what is brewing against me in the corridors of the French Tax Department,” Al-Zuhair said and called on top Saudi officials to come to his help.
The French tax authorities had previously ordered the Electronic Equipment Marketing Company (EEMCO), one of Al-Zuhair’s companies, to pay 65 million francs in tax after EEMCO had won a confidential defense contract in Saudi Arabia. “We took them to court and won the case. The court told them, ‘You have no right to tax EEMCO because it’s purely a Saudi company and Mr. Al-Zuhair is not residing in France’. The court asked them to pay EEMCO a compensation of 5,000 francs but they did not pay anything. After that, in 1997, they hit me personally to take revenge. They demanded tons of information and I produced all the documents they wanted.”
Al-Zuhair stated that all his income came from his businesses in Saudi Arabia. “Every penny I transferred to France came either from my deposits in the Kingdom or Switzerland.”
Al-Zuhair said French tax officials raided his flat in Paris, his house in Larressore and the SBA premises in 1996. “Seven officials raided our home in Paris at seven in the morning. Because of the shock my wife suffered a miscarriage and we lost a baby.” He said the officials had also tapped his phones for six months to determine whether he was running his businesses from France.
Al-Zuhair had multiple entry visas to France, and his office director said his boss never exceeded the period of stay set by the French immigration authorities. Al-Zuhair disclosed that the French lawyers had asked him to bribe unknown persons to reach an out-of-the-court settlement, but he refused.
Al-Zuhair feared the French authorities would confiscate his properties in southwest of France and his bank shares. He is trying to settle this issue through political and diplomatic channels.
The Saudi Foreign Ministry has intervened in the matter and urged the French authorities to wait until the court gave its ruling. According to Al-Zuhair, the ministry had called French Ambassador Bernard Politti to discuss the issue. Saudi Ambassador to Paris Faisal Al-Hujeilan has expressed his hope that the court decision would be in favor of the Saudi businessman. He said a senior judge in Paris with executive powers had revealed that there was no definite evidence proving Al-Zuhair was running business activities from France.
Herve Piquet, economic and financial counselor at the French Embassy in Riyadh, has sent a letter to the French Department of Tax saying he had scrutinized the papers that proved Al-Zuhair was a permanent resident in Saudi Arabia and carried out his business activities from there.
Minister of Finance and National Economy Dr. Ibrahim Al-Assaf has advised Al-Zuhair to follow up the case personally through the embassies in Riyadh and Paris and through the ministries of Foreign Affairs and Finance. Al-Zuhair has also contacted the Council of Saudi Chambers of Commerce and Industry seeking support.
The Saudi Embassy in Paris sent a letter to the French Foreign and Finance ministries in December 2000 requesting their intervention in the case but up till now there was no response from the French authorities.
