|
Julian Manduca
Malta’s Prime Minister Lawrence Gonzi declared that Malta will be renting out four floors of its Brussels embassy without properly considering the implications, MaltaToday has discovered.
Eight days after this newspaper asked whether Malta will lose tax exemptions on its proposed commercial embassy floors in Brussels, the Prime Minister was not in a position to give a definitive answer.
The Prime Minister was asked several times both via e-mail and face to face, but the only reply the he could offer was: “Government is still awaiting official advice from KPMG about the matter and will be able to provide the information in the coming days.”
Speaking to a financial controller in Brussels MaltaToday was told “when buying an office the national tax authorities will tax you 21 percent for new buildings or 12 percent for old buildings.” This means the Malta government will be liable to pay 12 percent of the value of the floors that to be rented out.
Until such time that these floors are rented out and whenever they are vacant there will also be local taxes to be paid. The financial controller said: “On top of that you will be charged by the local authorities. The amount is based on the size. To give you an indication from our tax department: Euro 7.50 per square metre for a surface from 76 to 250 m2; Euro 15 per m2 from 251 square metres onwards.”
Lawrence Gonzi must be ruing the day when he inherited the decision to purchase Malta’s embassy at Rue Archimede from his predecessors. Although it was Gonzi’s Cabinet that confirmed the purchase, it would seem buying Malta House was a fait accompli, and the Gonzi Cabinet had little choice in the matter.
As soon as news of the price hit the newsstands, Gonzi was on the defensive saying that the Lm9 million will be well spent and that the property is an investment. Richard Cachia Caruana, Malta’s ambassador to Brussels, said it was important to have an embassy close to the EU administrative blocks because he did not want his staff to lose time travelling to and fro. The Lm9 million – Lm6.5 for the property and Lm2.5 for refurbishments - did not go down well with most commentators, however, and when it was found that the building was bought and sold for a mere Lm2.6 million just a year earlier, the opposition went haywire.
When the chorus of disapproval reached fever pitch the Prime Minister told the nation that four floors of the nine story building are to be rented out on a commercial basis, giving a clear indication that the property purchased was much bigger than what Malta needed. The decision to rent was probably an afterthought but Gonzi was obviously feeling the heat from his critics.
The Prime Minister then claimed that another EU applicant country was also interested in the property in an attempt to show that the property was a good buy, but Times journalist Herman Grech contacted the Latvian government and was told it lost interest because the house was “far too expensive.”
There may even be further taxes to face as Belgian law has introduced a tax charged on the workspace offices have available. “They charge you per computer, in our case Euro 38, per computer,” the financial controller said. Clearly should Malta rent the floors out to third parties the taxes on office space would then be paid by the tenants, but should they be rented to Malta government entities, the government would still be footing the bill.
Criticism was also levelled at the people that were engaged in the purchase and those asked to assist with Malta House’s redevelopment. Government claimed everything was above board. Architect Martin Xuereb was chosen to redevelop the site and soon wound up on the front pages of newspapers because he also did private work for Richard Cachia Caruana which included planning applications made by front-men Hugh Attard Montalto and a certain Tonio Ellul.
The audit firm used in the deal is KPMG in Belgium and its associate firm in Malta has had Cachia Caruana’s brother Edward as one of its partners. KPMG also employs Richard’s sister Louise, who is married to the same Tonio Ellul, who also worked for the firm until
recently.
julian@newsworksltd.com
|
