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Taxing issues with Mohamed al-Fayed


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From the Ritz Hotel in Paris to Punch Magazine and Fulham Football Club -- al-Fayed thrives off diversity.
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(CNN) -- London, Geneva, Paris -- owner of the world famous Harrods department store, Mohamed al-Fayed is an extraordinary business traveler.

He also knows a thing or two about tourism and travel -- his store in Knightsbridge is one of the UK's top tourist destinations, with tens of thousands of customers passing through its door on an average day.

With a mind-boggling 20 restaurants, 300 departments, a beauty salon, bank and food hall, the Harrods visitor gets an idea of the complex business empire that al-Fayed runs.

There are many sides to the Egyptian -- grieving father, businessman, entrepreneur and entertainer.

There is also a life of controversy, whether it be over his fight for British citizenship, or claims over the death of his son Dodi and the late Princess of Wales.

Another bone of contention is his finances -- he is an example of someone who has chosen to move for tax purposes. After 35 years in Britain, al-Fayed has decided to base himself in Geneva ... for the moment.

"I have been forced to leave because they cannot settle my tax agreement, but it is my country, I am going nowhere," al-Fayed told CNN.

His battle with the UK's Inland Revenue continues after a Scottish court recently threw out his appeal against the removal of his special tax status. Al-Fayed has now vowed to take his case to the House of Lords.

Under a contract, drawn up in 1997, al-Fayed paid £240,000 ($446,000) in tax a year.

A spokesman for the Egyptian-born tycoon said that the decision by the Court of Session in Edinburgh could have "huge ramifications" for taxpayers who enter into agreements with the UK taxman.

"They singled me -- only me -- out of basically ten thousand people. Most of them do not want to contribute to the economy," he says.

"I employ 8,000 people in this country, here in Harrods 5,000 people. I also contribute to a lot of export business."

Al-Fayed also believes his case could seriously damage the UK economy and turn away wealthy investors.

The Inland Revenue is adamant.

"We entered into an agreement in good faith, which we later recognised was inappropriate," a spokesman told Accountancy Age magazine.

"Just to destabilize my business, to destabilize my family life they cancelled this agreement," says al-Fayed.

His business interests include the Ritz Hotel in Paris, Fulham Football Club, Punch Magazine, Kurt Geiger and Hyde Park Residence. According to the Sunday Times Rich List 2004 he is said to be worth $860 million.

He also sees his fight for British citizenship as a "comfort" issue and says he is still proud of his Egyptian nationality.

Yet al-Fayed also has other things on his mind.

"The most important thing for me is health. You wake up in the morning you can breathe, you can walk...you share this with people," he says.

CNN's Richard Quest contributed to this report


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