The government is currently negotiating with two building contractors to acquire some 125 apartments to be used for social housing purposes, Social Solidarity Minister Michael Farrugia confirmed this afternoon.

However, he refused to call the scheme a "tax swap" and instead said "the government will be giving a cheque to the contractors and then they will use it to pay their tax arrears".

The Sunday Times of Malta yesterday revealed that the government had reached a preliminary property for a tax swap with Tal-Ħerba Construction Limited so that apartments will be exchanged with hundreds of thousands of unpaid taxes due to the Inland Revenue Department and the VAT department.

Dr Farrugia declined to reveal the names of the companies it is negotiating with, the values of the properties involved and the valuations of how much the government be forking out.

Dr Farrugia declined to reveal the names of the companies it is negotiating with, the values of the properties involved and the valuations of how much the government be forking out

Pressed to state whether the Ministry of Finance and its Permanent Secretary have approved this agreement, Dr Farrugia declined to respond and said “discussions are still ongoing”.

When asked on the swap last week, Dr Farrugia said the government reached an agreement which had to be signed “in the coming days”. He also said that the agreement consisted of a tax swap.

Climbing down from his original statement, Dr Farrugia today said that the government had reached an agreement with one contractor but only on the valuations made.

The method of payment, including the possibility of a tax swap, are now being discussed by the Finance Ministry.

He said it will be the Finance Ministry which has to approve this deal.

The Sunday Times of Malta reported that senior government officials are warning Finance Minister Edward Scicluna against this scheme as it is unprecedented and may open the floodgates of tax swaps with all those who have tax arrears.

Asked whether the public with tax arrears will be given the same opportunity to settle their dues in kind, Dr Farrugia said: “Everyone had the option to participate in the request for proposals”.