MP’s companies cannot get COVID deferral without published accounts, minister says

Thake companies ineligible for COVID deferrals without published accounts, minister says

Updated at 4:39pm with David Thake parliamentary statement

Companies belonging to Nationalist MP David Thake might not be eligible to benefit from the COVID-19 tax deferral scheme, because arrears predate the pandemic and not all annual accounts were filed, tourism minister Clayton Bartolo told the House.

Bartolo was addressing the plenary in a debate on new taxation rules.

Bartolo was explaining a series of COVID-19 tax deferral schemes, saying these were only available for companies without pending tax arrears before the COVID-19 outbreak.

“The truth is that none of these companies can enjoy aid under the scheme,” he said referring to Thake, whose companies Vanilla Telecoms and Maltashopper Ltd owe some €270,000 and €550,000 in VAT arrears respectively.

“Under the scheme’s guidelines, a company that has a pending tax bill that predates COVID-19 cannot benefit from the scheme. Thake’s company has €175,000 from before COVID-19, and another company is 10 years behind on its annual accounts,” Bartolo told the House.

David Thake is sole shareholder in Maltashopper and Vanilla Telecoms, both of which have pending VAT bills. Vanilla Telecoms owes some €270,000 in unpaid VAT, which is now part of a repayment plan with VAT authorities. Maltashopper is facing an assessment for over €550,000 in moneys owed to the VAT department, and has had no annual accounts filed with the Malta Business Registry since its incorporation in 2011.

For Vanilla Telecoms, Thake admitted to having €270,440 in tax dues – €233,515 is down to pending VAT while the rest is interest and penalties. From the total amount, €174,790 are immediately due while the rest, he claimed, were deferred as part of COVID measures.

Similarly, Thake did not dispute that Maltashopper owes €550,000 in moneys owed to the VAT department, with no annual accounts filed since incorporation in 2011. He said that all of Maltashopper’s dues were tax-deferred under the governments COVID-19 scheme.

“There are people on the Opposition benches who withheld money from government despite being collected from their client,” Bartolo asserted in parliament on Monday evening. “Even worse, Thake’s trying to use schemes that his companies do not qualify for [to excuse his actions]. All the criticism coming from the Opposition on this case are frivolous.”

According to the Commissioner for Revenue’s rules on COVID postponements for tax, companies failing to comply with their tax obligations such as submission of documents returns and payments, are specifically excluded from these postponements.

The debate in parliament was triggered after the Nationalist Party filed a parliamentary motion for the repeal of a legal notice that cancels out tax arrears against property tax owed.

The legal notice allows defaulting taxpayers to not pay any tax due on the transfer of property purchased before March 2021, against their arrears. The notice received resounding criticism from the Chamber of Commerce, which said the scheme offered unfair amnesty. The Malta Developers Association also found fault with the scheme, arguing that the government was creating an unlevel playing field.

“Aid is there, but it shouldn’t be abused, as some in the Opposition are doing,” Bartolo concluded.

Thake has suspended himself from the PN parliamentary group after requesting that the Commissioner for Standards in Public Life investigate any ethics breach resulting from his two business companies being in arrears for VAT.

Thake said he would also he would also be resigning from the Opposition’s shadow cabinet.

On Monday Thake blamed cash flow problems for the outstanding VAT payments his telecoms company had accumulated.

Thake insisted the issue was not one of misappropriation of funds when asked whether the outstanding payments predated March 2020 when the COVID tax deferral scheme came into force. “When you are faced with issues of cash flow, and you have employees, you are faced with decisions, and this is a situation every self-employed or company director is faced with,” Thake said.

In parliament on Tuesday, Thake said that Bartolo's statements were incorrect and asked the Speaker to rule on whether the tourism minister breached parliamentary privilege with his statements.