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Inland Revenue Department adopts zero tolerance policy against tax evasion

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The Inland Revenue Department has adopted a zero tolerance policy against tax evasion and will try to complete investigations into every suspected tax evasion case within the shortest timeframe possible.

The Commissioner of Inland Revenue, Mrs Alice Lau, reminded people that tax evasion was a criminal offence under the Inland Revenue Ordinance and the department would carry out prompt investigation and institute prosecution action as appropriate.

Upon conviction, the maximum penalty for each charge is three years' imprisonment and a fine of $50,000 plus a further fine of three times the amount of tax evaded.

Mrs Lau's reminder followed a court case today (June 25) under which a property owner was convicted and jailed for 12 months. He was also fined $480,000 representing about twice the amount of tax evaded.

The court heard that the defendant rented out a residential flat and three car parking spaces and received monthly rental through his bank account. In his tax returns for six years of assessment he declared that none of his properties were rented out. He also submitted a false written reply to the department's request for information on the use of the car parking spaces. The total amount of tax evaded was $244,851.

Mrs Lau said this was the first case prosecuted and convicted under section 82(1)(e) of the Inland Revenue Ordinance in respect of giving false answers to requests for information made in accordance with section 51 of the ordinance. The court imposed a six-month sentence for this offence to run consecutively with the jail term for other offences, making an effective sentence of 12 months.

Deputy District Judge Johnny Chan pointed out that there was no interruption in the department's investigation and there was no delay in the present case, having considered the chronology of investigation provided by the prosecution.

"The department takes every measure to ensure fast handling of tax evasion cases. There is a stringent requirement on evidence in criminal prosecution. Depending on the complexity of the case and transactions involved, the department needs a certain amount of time to collect adequate evidence from various possible sources," Mrs Lau said.

"Typically, we would have to locate the defendant's bank accounts, trace the fund flow, examine documents, interview the witnesses and taking statements from them. We would also consult legal opinion to assess if there is sufficient evidence to initiate criminal prosecution.

"The degree of co-operation from the taxpayer and related parties, and the response of the witnesses can directly affect the progress of the investigation. The time needed to complete each case can therefore be different," she said.

Ends/Monday, June 25, 2007

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