Issue link: https://maltatoday.uberflip.com/i/618165
maltatoday, SUNDAY, 20 DECEMBER 2015 10 MATTHEW VELLA AN audit on gaming taxes col- lected by the Malta Gaming Au- thority (MGA) has revealed that financial statements presented by gaming operators did not give sufficient detail of the composi- tion of income for the purpose of tax calculations as required by the gaming authority. The National Audit Office's an- nual verification exercise found that monthly reporting obliga- tions with respect to player lia- bilities and taxes were not always being followed by the gaming operators – a risk for the MGA if operators do not have sufficient financial resources to cover their players' funds if they cease opera- tions. The NAO tested 45 licences, two of which belonged to casinos, one to the National Lottery operator and the remaining held by remote gaming operators: all accounted for €26,476,866 in gaming tax out of the total €53,785,256 in taxes payable to the MGA for the year. The NAO found that 16 com- panies, altogether holding 29 li- cences that were invoiced over €3.5 million in gaming tax, did not file regular reports on their cash resources – a problematic scenario since the MGA opened itself up to a situation where it could not assess if operators can cover players' funds. "The risk that MGA cannot take remedial action in a timely manner in- creases," the NAO said. Gaming operators must file monthly reports of the balances of players' accounts, the balances in the relative credit institutions, funds in transit or in the process of being cleared, and a resulting surplus or shortfall. A shortfall implies that the players' balances cannot be covered by the funds in the operators' bank accounts if they were to cease operation. On its part, the MGA said that in October 2015, it employed two financial compliance offic- ers to analyse the monthly player liability returns and ensure that the non-submission of these re- turns is reported to the Enforce- ment Directorate and that any fund shortfalls are immediately investigated. "Due to these ac- tions, MGA can already report a significant increase in submis- sions." Other similar scenarios were found at the MGA, with the au- thority unable to assess whether the tax due from gaming com- panies was correct, since inde- pendent tax calculations, against which reported figures could be compared, were not available. The NAO said the MGA was ac- cepting the amount of taxes as declared by the operators, with- out further questioning. "Similar issues were also en- countered when attempting to recalculate the taxation of €22,058,502 due by the two sampled casinos and the Na- tional Lottery operator. Test- ing revealed that a breakdown of these amounts was provided by said licensees in their respec- tive monthly tax submissions. However, even though audited Financial Statements were avail- able in the case of one casino and the National Lottery operator, the figures presented in these statements did not provide a suf- ficient breakdown of the revenue generated by the different games. As a result, since different taxa- tion rates apply to the various games, the taxation figure could not be recalculated for auditing purposes." MGA officials confirmed that during 2014, no procedure was in place for the checking of taxa- tion documents submitted, and related payments. Vetting from MGA's end was only being done in specific circumstances, such as upon the renewal of a licence. The authority has now set up a Revenue Assurance Unit, which has developed a risk assessment process to regularly categorise licensees' tax leakage risk as low, medium or high. High-risk licen- sees will be subject to a financial compliance review. News 10 News Risk to Sliema caves from naval clinic development valued at €25,000 JAMES DEBONO A €25,000 bank guarantee has been imposed by the Malta Envi- ronment and Planning Authority (MEPA) to ensure that excava- tions under the naval clinic, to make way for an eight-storey de- velopment by the Gasan Group, do not damage the fragile under- lying cave system below the naval clinic. This bank guarantee imposed on the Gasan group, to protect the Sliema caves, is considerably lower than the €47,000 bank guar- antee imposed on Polidano group in 2007 to ensure the protection of two unique internal staircases and other internal features in two traditional townhouses in Cathe- dral Street. The Polidano Group forfeited €14,000 of the €47,000 bank guarantee after the stair- cases were destroyed. The fragile cave system, which stretches for 33 metres below the promenade and Tower Road, in- cludes the iconic Ghar il-Lembi and Ghar id-Dud caves, which according to previous scientific reports are in danger of collapse. The permit which included the bank guarantees was originally approved last year but had to be approved again following minor changes proposed by the devel- oper. The bank guarantee is lower than that imposed on develop- ments such as the redevelopment of town houses in Sliema. When asked how bank guaran- tees are calculated and why this particular bank guarantee was lower than that imposed in other cases, a spokesperson for MEPA argued that "heritage-related bank guarantees vary according to the heritage in question and whether the risks are perceived to be minimal, medium or high". The spokesperson claimed that the bank guarantee is equivalent to the cost of restoration works and is forfeited if the perpetra- tor does not restore the damage and the works are "carried out by MEPA using the bank guaran- tee". According to the MEPA spokes- person heritage-related bank guarantees are approved by the MEPA board and revised from time to time to reflect current market rates for certain restora- tion works. No big risk to caves During the processing of the application the Malta Environ- ment and Planning Authority's Environment Directorate (EPD) had expressed concern about vibrations from excavations re- quired for developing by the Gas- an Group of a two-level car park beneath the Sliema pjazzetta on the underlying Ghar id-Dud cave system. Similar concerns were expressed by the Sliema council. But the Planning Directorate concluded that these excavations could still be carried out in a way that would not endanger the Ghar id-Dud and Ghar il-Lembi caves. The EPD noted that the pro- posed underground car park beneath the pjazzetta is directly adjacent to the area identified as "moderately sensitive" to "exter- nal stress" in terms of cave and ground stability in a survey car- ried out in October 2004. The study was conducted to assess the impact of a car park which had been proposed below the existing promenade, in the immediate vicinity. Plans for the development of this car park were shelved by the previous administration after MaltaToday published the re- sults of these studies. According to the report, Ghar il-Lembi has a "very weak" inter- nal stability and could collapse in the "short term" while the in- ternal stability of Ghar id-Dud is "weak" but not as weak as that of Ghar il-Lembi, making its col- lapse less imminent. The EPD raised concerns on the works to be carried out in the vicinity of the sensitiv- ity zones and requested that the underground car park be down scaled to avoid excavations in the area nearest to the sensitive zone and called for a targeted geo-technical study to assess the impact of excavations in the other areas. According to the EPD, since several karstic features are known to occur in the area "it cannot be safely assumed that the vibra- tions will not travel to the high sensitive zones, potentially caus- ing adverse effects to the cave systems". While taking note of these com- ments the Planning Directorate concluded that the proposed car park under the pjazzetta is further away from the sensitive area. The Planning Directorate insisted that the sensitivity zones do not extend below the open piazza. Moreover the 2004 re- port also states that in the areas of moderate sensitivity like that immediately in the vicinity of the proposed car park, small scale works can still take place if ad- equate precautions are taken. A report commissioned by the Sliema local council in 2007 re- vealed that the faulted coast along Ghar id-Dud is retreating rapidly by the dislodgement of boulders along joints and faults, affecting the stability of the Tower Road promenade. The report warned that this could lead to either par- tial or total collapse of the caves, resulting in the promenade lit- erally "caving in", and causing a tragedy. "If collapse is sudden and dur- ing daytime or early night time, injury and loss of life may result," the report by Geotek Services warned. €23,000 guarantee for facade A further €23,000 bank guaran- tee is also being imposed to pro- tect the remaining façade of the naval clinic, which was illegally demolished. The developers were fined €2,300 for this illegality be- cause the application predated the introduction of the hefty fines introduced in 2012. The MEPA board had already approved the permit last year but had to meet again to consider a modification of permit condi- tions to reflect the actual draw- ings approved by it. No changes were made to the bank guaran- tees approved last year. The money deposited in the bank guarantee will only be re- leased by MEPA following com- pletion of the works. The de- velopers will have to forfeit the amount if the permit condition is not abided by and MEPA is not precluded from taking further ac- tion to ensure that the condition is adhered to. jdebono@mediatoday.com.mt Authority told to tighten screws on gaming taxes Licence Number of Licences Amount Invoiced during 2014 Class 1 26 €561,500 Class 2 6 €2,208,817 Class 3 8 €1,627,079 Class 4 2 €20,968 Casino 2 €9,957,720 National Lottery 1 €12,100,782 Totals 45 €26,476,866 Architect's impression of the planned Gasan Group development