Updated 2.20pm, adds government statement

Tax chief Marvin Gaerty is to step down by the end of the month, with the transport ministry’s top official replacing him. 

The government said in a statement on Tuesday that Gaerty would stop serving as the Commissioner for Revenue at the end of January, after nearly 10 years in office.

Gaerty will be replaced by Joseph Caruana, the permanent secretary at Ian Borg’ transport ministry. This post will be taken up by Johan Galea who has been permanent secretary in the Justice Ministry since 2016.

Gaerty will take up a public post tasked with advising on fiscal policy matters within the finance ministry.

The change comes after months of brewing tensions between the taxman and Robert Abela’s administration, with sources saying the two have not always seen eye-to-eye on how best to reform the island’s tax regime.

Joseph Caruana

Shortcomings in the way tax crimes are uncovered were highlighted as one of the leading reasons Malta was last year placed on the so-called grey list of untrustworthy financial jurisdictions. 

International watchdog Financial Action Task Force has said Malta must do more to fight tax crimes and make better use of intelligence to catch tax dodgers if it wants to get off the list.

Just last week, a team of top government officials held a meeting with the FATF evaluators to discuss the island’s efforts to shore up its fight against money laundering and financial crime. 

The sources said that, while progress was registered during the virtual meeting, ongoing deficiencies in the fight on tax evasion were raised. 

The government has announced plans to come down hard on tax cheats, with Finance Minister Clyde Caruana saying defaulters will no longer be tolerated. 

His comments raised eyebrows in the face of reports exposing how MPs from both sides of the House had been found with irregular tax positions. 

Even political parties are in violation. Last year, Times of Malta reported that the country’s two political party’s media companies owe more than €5 million between them in unpaid VAT and have been warned to start to honour agreements to settle their dues.

Times of Malta is informed that the preferred candidate to take over from Gaerty was selected by the Office of the Prime Minister late last year.

Caruana is set to move into the Floriana offices of the inland revenue commission in just over two weeks’ time. 

Some have raised concerns over Caruana’s appointment as his brother, Edward, is facing corruption charges. 

A former canvasser to Minister Evarist Bartolo, Edward Caruana was, in 2017, charged with acts of corruption and fraud while acting as an official of the government’s school-building agency, the Foundation for Tomorrow’s Schools.

He was also charged with falsification of documents and bribery. 

Joseph Caruana was moved out of his post as permanent secretary at the education ministry when the scandal broke and transferred to the finance ministry.  

Gaerty has himself been in the headlines in the past. He was questioned by the police in 2020 as part of an investigation into trading in influence involving Yorgen Fenech.

Fenech stands accused of conspiring to murder Daphne Caruana Galizia in 2017.

Financial crime investigators had been looking into a 2014 message exchange between Gaerty and Fenech, following an analysis of Fenech’s mobile phone. 

A few weeks later, the investigation against Gaerty was closed, with no charges brought.