Updated 1.10pm, adds ADPD statement

Construction tycoon Charles Polidano has reached a deal with the government to shrink a massive €40 million tax bill.

Polidano, known as Iċ-Ċaqnu, held meetings with senior government officials in recent weeks to hash out the deal that ultimately saw his remaining tax dues whittled down to less than €10 million, which he has agreed to pay in regular instalments. 

The agreement includes him setting off a substantial portion of his original tax arrears against property he 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. 

It is understood that, after offering securities as a down payment in the region of €7 million, Polidano is now left with a pending balance of less than a quarter of his original bill.

Sources privy to the negotiations said Polidano had informed the authorities that the initial tax bill would have crippled him financially “beyond repair”.

The deal, struck following meetings at the Finance Ministry, also saw Polidano qualify for a 30% reduction on the initial €40 million amount he was ordered to pay.

In November 2020, Times of Malta reported how Polidano had been ordered to settle a mammoth tax bill or face possible court action. 

A number of court documents – judicial acts – had instructed him to report to the Inland Revenue Department and regularise unpaid taxes stretching back to the mid-1990s.

His company, Polidano Group, is one of the leading construction firms in the country, regularly involved in major national infrastructure projects.

Sources said that part of the deal reached to regularise his tax deal had seen Polidano forgo payment of around €4 million on a stretch of land the government agreed to purchase to develop social accommodation.

Questions sent to the Housing Ministry about the matter earlier this week have yet to solicit a response.

One of the richest men in Malta

Polidano, 60, is one of the wealthiest men on the island. However, associates of his say much of his wealth is tied up in immoveable assets, some of which are subject of legal or administrative proceedings.

This includes his controversial Montekristo Estates in the outskirts of Siġġiewi, once described by the planning regulator as “one of the largest illegally-built construction sites on the island”.

Infrastructure Malta last year told Times of Malta that Polidano Group was among a number of construction operators that have been struck off the list of companies eligible to maintain and repair roads and carry out other national projects due to heavy tax dues.

It is understood that efforts are underway by Polidano to be taken off the contracts blacklist since the Inland Revenue Department has now issued him with a tax compliance certificate.   

Contacted for comment, Polidano’s lawyer, Jean Paul Sammut, said his client had no comment to make.

ADPD seeking NAO investigation into matter

In a statement on Wednesday, ADPD demanded an audit of Polidano’s tax discount.

It said the deal raised serious questions as to how the terms were negotiated and the public had a right to the full details.
 
Party chairperson Carmel Cacopardo said that any such deal needed to stand up to public scrutiny. 

Civil servants, he said, 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”.

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, he said, added that 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 television stations. Every euro taken off a tax bill is a euro taken away from a child's education, our healthcare, spending on environmental wellbeing,” he said.

Cacopardo said he will be formally asking the NAO for an investigation into the matter.