Tax evasion: win a candy, lose a factory, and in jail
2025-4-11
The Hong Kong Inland Revenue Department announced that on March 5 this year, the Eastern Magistrates' Courts found a couple guilty of tax evasion. The first defendant was sentenced to three months in prison and a fine of HK$330,000, while the second defendant was sentenced to three months in prison, suspended for three years, and fined HK$400,000.
The two defendants were involved in underreporting rental income by a total of 1.41 million to 1.7 million yuan from 2015 to 2020, and underpaying taxes by HK$160,000 to HK$200,000
What is noteworthy about this case is that the amount of tax underpaid is very small (only about 30,000 yuan per year), but the penalty is very severe, with 3 years in prison, which is the maximum prison term. This shows the severity of the penalties imposed by the tax bureau and the courts on tax evasion.
Is it worth it to evade taxes just to save tens of thousands of dollars a year, but also to endure tremendous pressure during the investigation/trial, and ultimately pay double the fine and endure jail time? From any perspective, it's not worth it.
Our company believes that to properly handle tax issues, we should hold on to the following principles: 1. Tax returns must be filed in a legal and reasonable manner; 2. Recognize that paying taxes is the responsibility of citizens and that they should pay appropriate taxes; 3. Find a qualified accountant to assist with tax returns; 4. Find an accountant who truly wants to help you and be your long-term partner.
Under the Inland Revenue Ordinance, tax evasion is a criminal offence. Once convicted, the maximum penalty for each charge is three years' imprisonment and a fine of HK$50,000, plus a fine equal to three times the amount of tax undercollected.
Our company is a licensed accounting firm in Hong Kong with more than 30 years of experience in handling various tax matters. If you have any tax questions, please contact us.
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