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Taxpayer jailed for evading salaries tax

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A former team leader of the marketing department of a finance group was sentenced to six months' imprisonment and fined $389,708 for charges relating to evasion of salaries tax at a District Court today (November 8). The fine imposed is equivalent to 200% of the tax evaded. The Judge said the court had to impose immediate custodial sentence in view of the seriousness of the offence. The defendant was convicted on October 27.

The defendant, aged 45, was charged with four counts of understating, wilfully with intent to evade tax, his income in his tax returns, contrary to section 82(1)(a) of the Inland Revenue Ordinance.

The court heard that during the period from April 2002 to March 2006, the defendant was employed by the finance group of companies as a team leader of the marketing department, and received salaries, commission and rebate income. He led a team of over 100 subordinate account executives, providing services to clients for the trading of forex and bullion.

During the years of assessment 2002-03 to 2005-06, the defendant attributed part of his own commission and rebate income to newly recruited, subordinate account executives. The defendant then asked these subordinates to cash the inflated pay cheques and deposit the excess amount in his bank account or his wife's account. The defendant reported only the income that he received directly from his employers in his tax returns, and omitted to declare the income received through his subordinates.

In the four years of assessment, the defendant understated his taxable income in the amount of $1,080,000 by attributing part of his commission and rebate income to, and receiving these through, his subordinates. The amount of tax undercharged was $194,854.

A spokesman for the Inland Revenue Department reminded taxpayers to file correct tax returns. Tax evasion is a criminal offence. Omitting to report any taxable income in a tax return is an offence under the Inland Revenue Ordinance. The maximum penalty for each convicted offence is three years' imprisonment and a $50,000 fine, plus a further fine equivalent to three times the amount of tax evaded.

Ends/Monday, November 8, 2010

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