No tax deal with Charles Polidano, government says in denial of reports

Government denies claims €40 million tax bill for Charles Polidano had been reduced to €10 million

Developer Charles Polidano, known as
Developer Charles Polidano, known as "Ic-Caqnu"

The finance ministry has denied claims that construction magnate Charles Polidano’s €40 million tax bill had been reduced to less than €10 million.

The Times of Malta reported on Wednesday that in meetings with senior government officials, Polidano’s tax dues were “whittled down to less than €10 million”.

The newspaper reported that after a substantial €10 million discount on the original tax bill, Polidano had agreed to forgo payments on land to the Housing Authority valued at some €4 million, another €10 million in works rendered on government projects, apart from securing a €7 million loan to pay a down-payment and repayment agreement for the remaining €10 million.

The alleged deal was to set off a substantial portion of his original tax arrears against property handed over to the government as well as construction and excavation works his companies had carried out for a number of state entities but were still awaiting payment.

The ministry categorically denied the report, stating the allegations “are manifestly unfounded and completely false.”

It also said there will be no property-for-tax swap, stating that the Housing Authority back in 2019 had issued a public expression of interest to acquire centrally located and sizeable parcels of land to be developed for social or affordable housing.

Subsequently, an evaluation committee was set up to evaluate the feasibility of each proposal. Three independent architects, who were not part of the evaluation committee, were requested to make a joint valuation of each site offered by bidders.

“One of the four proposals received by the Authority’s evaluation committee consisted of a 2,000sq.m parcel of land at Luqa currently owned by Polidano Properties Limited, adjacent to property already owned by the Housing Authority. This parcel of land was subject to a valuation by the architects engaged by the evaluation committee and a further valuation commissioned by the Office of the Commissioner for Revenue.

“On this deed of transfer, the Housing Authority will not be paying the purchase price to Polidano but will be delegated at law to transfer this amount to the Commissioner for Revenue, in settlement of part of the balance due by Polidano. Furthermore, all taxes due in connection with this transfer will be paid to the Government,” the government said.

The ministry said it was collecting arrears that had remained uncollected for decades, “giving all taxpayers fair and equal treatment to regularise themselves within the parameters of the law. A credible newspaper ought to do better,” it said.

ADPD want NAO scrutiny

ADPD has asked for the full details of the reduction in tax dues given to Polidano, and said it will be formally asking the NAO for an investigation into the matter.

“This is a matter of public interest. Any such deal reached needs to stand up to public scrutiny. Civil servants should have limited discretion on such matters and therefore for the avoidance of doubt that such limited discretion was not abused, we call on the Auditor General and the National Audit Office to conduct an audit into the negotiation brief,” ADPD chair Carmel Cacopardo said.

“The dubious method of payment in kind in lieu of tax, such as the transfer of properties and the ‘bartering’ of works should also be audited. The tax owed is substantial and clarity and transparency is paramount.

“Any suspicions that tax reductions are a ‘thank you’ for any donations to the party in government must be swiftly dispelled. It is well known and documented that party financing laws are circumvented by big donors purportedly buying services from commercial companies owned by PL and PN, which money is used for propping up their campaigning efforts especially on their TV stations. Every Euro taken off a tax bill is a Euro taken away from a child’s education, from our healthcare, from spending on our environmental wellbeing.”