One bureaucrat built tax haven in Luxembourg
THE Wall Street Journal last week reported that a business friendly bureaucrat spent years engineering this country's most valuable export: tax relief. Marius Kohl, as the Head of a Government Department approved thousands of tax arrangements for multinational corporations, sometimes helping them save billions. Luxembourg has only 550,000 residents but has more than 50,000 Companies. Foreign Companies flocked to this tiny country because of the speed and ease of the approval process that Kohl presided over. "Sometimes it's easier if you only have to ask one person", Kohl said in a recent interview.
According to the WSJ report, a senior officer of the OECD said, "Luxembourg's wealth comes from helping companies not pay taxes in the countries where the value was created"
On per capita basis Luxembourg is the richest Country on Earth, with taxes as less as 0.4 percent compared to over 20 percent in many countries.
One of the advantages that businessmen find in Luxembourg is that the tax laws are very clear and if they are not clear, there is an open line with the ministers and problems are solved. It takes just a meeting to get a tax ruling and sometimes Kohl would give even oral rulings - binding and believable. Kohl earned a reputation for always honouring his preliminary rulings. "He never changed his mind." Kohl says none of his superiors in the finance ministry, including Mr.Juncker, who served as finance minister for two decades, questioned or criticized his approach. He was always careful to follow the law but if he could take the business-friendly reading, he would.
"The work I did definitely benefited the country, though maybe not in terms of reputation," he says.
While on Black Money and tax avoidance, it maybe worthwhile to read an interesting book, The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business. Though we all think that the taxmen and the taxpayers are like cat and mouse, the author of this book explains that the cats and the fattest mice are not enemies at all. He writes about how multi nationals with the help of world famous accounting firms have avoided tax in all the major countries of the world - with the support of the Cats.