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Suspended jail sentence for businessman over tax evasion

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A businessman was convicted today (July 7) at the District Court on charges of evading profits tax. He was sentenced to four months' imprisonment, suspended for 12 months and fined $700,000, representing 147% of the tax evaded.

The defendant, aged 76, pleaded guilty to two charges of wilfully, with intent, assisting his wife to evade profits tax by making use of, or authorising the use of fraud, art or contrivance, by inflating the amounts of purchases for the two years of assessment 1994/95 and 1995/96, contrary to section 82(1)(g) of the Inland Revenue Ordinance (IRO). He also pleaded guilty to three charges of wilfully, with intent, evading profits tax by signing tax returns for the years of assessment 1996/97 to 1998/99, in which purchase amounts were inflated, without reasonable grounds for believing the same to be true, contrary to section 82(1)(d) of the IRO.

The court heard that in 1975 the defendant began a paper products business. It was initially registered in the name of his wife. On November 8, 1996, the defendant was admitted as a partner of the business. On November 18, 1996, his wife left the partnership and the defendant operated the business as a sole proprietorship thereafter.

An investigation by the Inland Revenue Department revealed that the defendant had inflated the amounts of purchases for the business. The payments allegedly made to suppliers for settling the inflated purchases were actually deposited into the bank accounts of the defendant or his wife, or used to settle the defendant's credit card debts. For the five years of assessment 1994/95 to 1998/99, the total amounts of purchases inflated were $2,936,428 and the resultant total tax evaded was $473,421.

A department spokesman reminded people that tax evasion was a criminal offence under the IRO. Upon conviction, the maximum sentence 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.

Ends/Friday, July 7, 2006

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