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Company fined for filing incorrect Employer's Tax Returns

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Magistrate Mr Ian Candy of the Eastern Magistracy today (July 5) convicted a company of four counts of offence in respect of making incorrect Employer's Returns of Remuneration and Pensions (Employer's Returns). The Company was fined a total of $130,000.

This is the first case in which prosecution is brought against an employer for filing incorrect Employer's Returns to the Inland Revenue Department.

The Company was charged, without reasonable excuse, for making four incorrect Employer's Returns for the years of assessment 1993/94 to 1996/97 inclusive, contrary to section 80(2)(a) of the Inland Revenue Ordinance (the Ordinance). The defendant pleaded guilty to all the four charges.

Pursuant to section 52(2) of the Ordinance, an employer is required to file for each year of assessment an Employer's Return including IR Forms 56B for the purpose of reporting the name, place of residence and the full amount of remuneration in respect of all the persons within the prescribed scope, who were employed during that year.

The Court heard that the top management of the defendant comprised mostly Japanese seconded from its ultimate holding company in Japan, and the remuneration of these Japanese expatriates, including their payments of salaries tax in Hong Kong, were paid by the defendant.

An investigation into the Employer's Returns filed by the defendant for the years of assessment concerned revealed that the defendant had omitted IR Forms 56B in respect of 15 Japanese expatriates and a local senior manager, who received remuneration from the defendant totalling to $11,273,944 for the three years of assessment from 1993/94 to 1995/96. In the year of assessment 1996/97, a portion of the remuneration in respect of that local senior manager amounting to $416,960 was also found to have been omitted. The amount of tax that would have been undercharged in consequence of these incorrect Employer's Returns totalled $1,649,002.

The Inland Revenue Department reminds the public that making incorrect returns without reasonable excuse is an offence which attracts heavy penalty, and the making of incorrect Employer's Returns is no less serious than that of making incorrect tax returns by individual taxpayers. A person who, without reasonable excuse, makes an incorrect return shall be guilty of an offence and is liable to a maximum fine of $10,000 and a further fine equivalent to three times of the amount of tax which has been undercharged in consequence of such incorrect return.

End/Wednesday, July 5, 2000

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