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Property owners convicted of tax evasion sentenced to suspended imprisonment

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A couple, who jointly owned a property in Kowloon for letting purposes, were convicted of evading Property Tax at the District Court today (June 9). They were sentenced to six months' jail term, suspended for two years, a fine of $30,000 each and a further fine of $200,000 each.

The first defendant, aged 54, pleaded guilty to five charges of wilfully with intent to evade tax by making a false statement or entry in the Property Tax Return in respect of the property for the years of assessment from 1995/96 to 1999/2000, contrary to section 82(1)(b) of the Inland Revenue Ordinance.

His wife, the second defendant, aged 50, pleaded guilty to five charges of wilfully with intent to evade tax by making use of fraud, art or contrivance to understate the rental income of the property for the years of assessment from 1995/96 to 1999/2000, contrary to section 82(1)(g) of the Inland Revenue Ordinance.

The Court heard that investigation by the Inland Revenue Department (IRD) revealed that the defendants received rental income totalling $5.9 million from letting of the property during the relevant five years of assessment. However, the defendants, wilfully with intent, created a sham head tenant for the property and treated part of the property's rental income as that of the said sham head tenant. A savings account, in name of the second defendant and the sham head tenant, was operated and controlled by the second defendant as the depository for rental income from the property. The monies deposited were eventually withdrawn by the second defendant and transferred to the defendants' joint savings account.

The defendants had understated the assessable value of the property by $5,081,900 in the Property Tax Return for the five years of assessment. The resultant tax undercharged was $358,387 in total for the first defendant and $309,810 in total for the second defendant.

A spokesman for the IRD said that tax evasion is a criminal offence under the Inland Revenue Ordinance. The maximum penalty will be three years' imprisonment and a fine of $50,000 on each charge, plus a further fine equivalent to three times of the tax evaded. Tax evaders may also face prosecution of cheating public revenue under Common Law and is punishable by the Criminal Procedure Ordinance, which carries a maximum penalty of seven years' imprisonment plus a fine of no limit.

End/Monday, June 9, 2003

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