Finance Minister Edward Scicluna preferred not to comment on the property-for-tax swap scheme his ministry is discussing with contractors.
A set of questions sent by the Times of Malta to the Inland Revenue Department and the Finance Minister a fortnight ago remained unanswered.
Prof. Scicluna shifted the onus onto the Social Solidarity Ministry.
“The process by the Social Policy Ministry is still ongoing. This was reported by the minister himself during the press conference. There is nothing to report from our side at this stage,” he said.
This brief reply contrasts with what Social Solidarity Minister Michael Farrugia said during a press conference on Monday after The Sunday Times of Malta carried a report on the scheme.
Confirming that the government was negotiating with two contractors over the possibility of buying 135 unsold apartments in exchange for their settling of tax arrears, Dr Farrugia said a deal had already been struck with one of the contractors.
“One of the contractors offering us apartments has already accepted out offer. Now, the Finance Ministry is trying to find the right formula of how this can be done,” he said.
Dr Farrugia avoided calling the scheme a tax-swap but said the government would be issuing a cheque to the contractors who would use the money to settle their tax arrears.
When asked if the contractors could use the money for other purposes, Dr Farrugia did not reply.
Senior government officials told this newspaper the Finance Minister was very uncomfortable with the deal as he had already been warned such a barter was unprecedented and would set a precedent with many more businessmen wanting to settle their tax arrears in kind.
The deal requires the signature of the Finance Ministry to materialise.
The Sunday Times of Malta reported that the first preliminary deal had been reached with Tal-Ħerba Construction Ltd. The deal was arranged through the intervention of auditing company Nexia BT.
It was reported that Tal-Ħerba had a number of garnishee orders issued against it by the Inland Revenue Department and the VAT Department. Also, in 2012, the court had ordered the company to pay Bank of Valletta over €600,000 in unpaid loans.
The Times of Malta asked the Finance Ministry whether Maltese laws allowed tax swaps, to provide the current legislative framework making this scheme possible and to state whether such type of agreement would also be made possible to other taxpayers who had pending arrears to square with the government. However, no replies were forthcoming by the time of writing.
ivan.camilleri@timesofmalta.com