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Computer systems analyst gets suspended jail sentence for tax evasion

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A spokesman for the Inland Revenue Department (IRD) today (August 2) warned taxpayers that tax evasion was a criminal offence under the Inland Revenue Ordinance.

The department adopts a zero tolerance policy against tax evasion and will carry out prompt investigation and institute prosecution action as appropriate.

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

The spokesman gave this warning following a court case under which the defendant, aged 37, a computer systems analyst, was sentenced to seven months' imprisonment, suspended for three years, for evasion of profits tax in the District Court today.

The defendant was earlier convicted of evading profits tax and failing to inform the Commissioner of Inland Revenue (CIR) in writing of his chargeability to profits tax.

The defendant was also fined $540,000, representing about 200% of the tax evaded in respect of the evasion of profits tax, and $16,000 in respect of the failure to inform in writing of his chargeability to profits tax.

The spokesman also reminded taxpayers that every person chargeable to tax for any year of assessment must inform CIR in writing of his chargeability not later than four months after the end of the basis period for that year of assessment unless he had already been required to furnish a tax return for that year of assessment.

"A person who fails to notify chargeability without reasonable excuse shall be guilty of an offence and is liable for each charge to a maximum fine of $10,000 and a further fine of three times the amount of tax undercharged," the spokesman said.

The defendant set up a partnership business Company A in 1992. It was managed and operated by him. However, he omitted most of his service income totaling $1,858,262 from the Profits Tax Returns of Company A for the years of assessment 1995-96 to 1998-99. The total amount of tax evaded was $271,332.

The defendant also stated in the Profits Tax Return of Company A for the year of assessment 1998-99 that it ceased business on February 9, 1999.

An investigation by IRD revealed that the business continued to receive service income as usual in the years of assessment 1999-2000 and 2000-01, but the commissioner was not informed in writing of the company's chargeability to profits tax. The total amount of assessable profits was $351,854 and the resultant tax undercharged was $52,777.

Ends/Thursday, August 2, 2007

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