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Heavy penalty for tax dodger

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The ex-personnel manager of a company, who had pleaded guilty to two charges on tax evasion at the District Court in January, was sentenced today (February 7) to 240 hrs of community service, the maximum permitted by the law, and fined $500,000, which was about 190% of the amount of tax evaded.

The defendant was the most senior local staff of the company. He was entrusted with the responsibilities to sign and file the Employer's Return of Remuneration and Pensions (Employer's Return) on behalf of the company, for the purpose of reporting to the Inland Revenue Department (IRD) the remuneration received by its employees.

In particular, the defendant was responsible for the checking and signing of that part of the Employer's Return prepared by his subordinate to report the remuneration received by him as an employee.

In respect of the Employer's Returns for the years of assessment 1994/95 and 1995/96 signed by the defendant and filed on behalf of the company to the IRD, the defendant, wilfully with intent to evade tax, deliberately omitted to include details of his own remuneration in the Employer's Returns filed for those years.

As a result, no salaries tax assessments were raised on the defendant as the IRD had no knowledge that he had derived employment income during the relevant period. The amount of tax evaded for the years of assessment 1994/95 and 1995/96 were $129,979 and $137,267 respectively, the total amount being $267,246.

In passing the sentence, Judge Line emphasized that the court would not take a soft stand on tax evasion cases and he would not have hesitated to impose jail term on the defendant if it had not been for his guilty plea, the relatively simple scheme of evasion and the not too substantial amount of tax involved.

Having further taken into account that the conviction had caused the defendant to resign from his job, the good reference from his former colleagues and the recommendation in the community service report, he sentenced the defendant to 240 hours of community service instead of imprisonment. The defendant was also fined $50,000 for each convicted charge and was ordered to pay a further fine of $400,000. The total fine of $500,000 represented about 190% of the amount of tax evaded.

An IRD spokesman reminds employers that the Employer's Return is an important return which enables the department to verify the income reported by an individual income earner. The filing of an incorrect Employer's Return is an offence which attracts the same penalty as the filing of other incorrect tax returns.

"Besides, tax evasion or assisting any other person in tax evasion is a criminal offence. Upon conviction, the maximum sentence is three years' imprisonment and a fine of $50,000 for each charge, and a further fine equivalent to three times of the tax evaded," he said.

End/Wednesday, February 7, 2001

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