Berlusconi Faces Fresh Outrage Over Tax Affairs

by Ulrika Lomas, for LawAndTax-News.com, Brussels

13 January 2006

Silvio Berlusconi has come under renewed attack over his tax affairs after it emerged that the Italian leader took advantage of an amnesty style law passed under his own government to prevent tax officials from delving into his past tax records.

In a move that has outraged opposition politicians, Berlusconi reportedly used a legal provision which meant that he could avoid checks into his tax history dating back to 1999 by making a payment of EUR1,800 accompanied by a tax declaration.

Opposition leader and former Mayor of Rome, Francesco Rutelli, who now heads the centrist Daisy Coalition, was quoted as remarking in the Italian daily in Corriere della Sera that only Berlusconi "could have the cheek" to use one of his own laws to avoid a tax inquiry.

However, the Berlusconi camp has strongly denied that the Prime Minister used his position to gain a special advantage, and his lawyer and spokesman Niccolo Ghedini told the Berlusconi-owned Il Giornale newspaper that "millions" of Italians have been advised to use the same procedure.

Ghedini also stated that Berlusconi, whose vast business empire has made him Italy's wealthiest man, was one of the state's leading taxpayers.

Elected in 2001, Berlusconi has faced numerous allegations of tax evasion, fraud and conflicts of interest involving his businesses since he became Prime Minister.

A Milan court is currently considering whether to indict Berlusconi, along with 12 other defendants, for tax fraud, false accounting, money laundering and embezzlement stemming from transactions in which his television network Mediaset acquired US film rights through two offshore companies between 1994 and 1996 and allegedly artificially inflated the purchase price to avoid tax.

Berlusconi has also been accused of paying $600,000 to British lawyer David Mills, the husband of UK Culture Secretary Tessa Jowell and one of the co-defendants in the Mediaset inquiry, to give false testimony in 1997 in a trial in which Berlusconi was charged with bribing tax officials to give favourable tax audits of his media companies.

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