A businessman was sentenced to 18 months’ imprisonment and ordered to pay a total fine of $11,700,000, equivalent to approximately 150% of the total tax evaded after being convicted of tax evasion at the Wan Chai District Court today (May 16).
The defendant, aged 43, was a director of Company A, as well as a beneficial owner of Company B and Company C. The three companies had been making profits since commencement of business in 1990, 1991 and 1993 respectively. However, the defendant did not report their profits to the Inland Revenue Department (IRD) in the profits tax returns in respect of Company A. He also procured his mother to file a return for Company C with the profits column left blank.
Investigation by the IRD revealed that Company A understated profits of $34,413,331 with tax undercharged of $5,925,619 for the years of assessment 1990/91 to l997/98; Company B understated profits of $751,628 with tax undercharged of $112,744 for the year of assessment 1992/93; and Company C understated profits of $12,610,687 with tax undercharged of $1,891,602 for the years of assessment 1993/94 to 1995/96.
The defendant was prosecuted under section 82 of the Inland Revenue Ordinance (IRO) for filing incorrect profits tax returns in respect of Company A for the years of assessment 1991/92, 1993/94 and 1996/97. Charges were also laid against the defendant under Common Law and the Criminal Procedure Ordinance for cheating the Commissioner of Inland Revenue of tax by failing to account for the profits of Compnay A, Company B and Company C. The defendant pleaded guilty to and the Court convicted the defendant of the Common Law charges only in relation to Company A and Company C.
A spokesman for the IRD reminds the public that cheating the public revenue is contrary to Common Law and is subject to severe penalty. In addition, the IRO provides heavy penalties for tax evasion, including 3 years’ imprisonment and a fine of $50,000 for each charge, plus a further fine equivalent to three times the amount of tax undercharged.
Source from: Inland Revenue
https://www.ird.gov.hk/eng/ppr/pca_archive/03051611.htm