Cateno De Luca, 45, was elected at regional elections on Sunday on a centre-right Union of the Centre (UCD) list, despite being termed by rivals an "unpresentable" – a phrase used for candidates tarred by allegations of corruption.
He has been placed under house arrest over accusations that he and the president of a federation of small businesses in Sicily had developed a tax dodging system based on fake invoices.
The scheme is estimated to have cost the tax man some €1.75 million ($2 million), police said.
De Luca was already being prosecuted for tender rigging, according to Italy's La Repubblica. The prosecution has asked he be sent down for five years on that count, but the court has yet to rule.
According to the paper, De Luca just announced plans to run for mayor of Messina, Sicily's third-biggest city.
De Luca wrote on Facebook that he had been warned the arrest was coming, Ansa reported.
"I say that this case will end like the other 14 – with an acquittal," it quoted him as saying.
The centre-right's main challengers in Sicily, the populist Five Star Movement, made the "unpresentables" a focus of their campaign.
The party, which was founded on an anti-establishment, anti-corruption platform, publicly identified all the centre-right candidates that it said were suspected – or had been convicted – of wrongdoing.
In ta widely shared video, Five Star candidate Giancarlo Cancelleri read the names of all the UCD's "unpresentables"; it took him ten minutes.
Of the 17 people on his list, five – including De Luca – were elected in Sicily's October 5th vote.