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Printing Company, Director and Manager Convicted of Tax Evasion

Updated: Jul 13, 2023

A printing company, its director, and manager were convicted of evading profits tax at the District Court. The charges include preparing or maintaining false books of accounts, omitting sales income, and signing false tax returns. An investigation by the Inland Revenue Department (IRD) revealed that the director had made use of a bank account of a dormant company to receive the sales incomes from a customer. The director transferred only part of the incomes to the bank account of the printing company and the remaining balance to the couple's personal bank accounts to evade tax.

The printing company, its director, and manager pleaded not guilty to the charges. After the trial, they were convicted of a total of 11 counts of wilfully, with intent, evading tax. The charges comprised six counts for the three defendants of preparing or maintaining false books of accounts or other records, one count for the printing company of omitting sales income from the profits tax return, and four counts for the director of signing the profits tax returns without reasonable grounds.

The investigation by the IRD revealed that the director fabricated debit notes and relevant receipt records by amending the product unit prices and sales amounts of the original debit notes to match with the amounts deposited into the printing company's bank account. Such false records were then sent to the accountant for the preparation of financial statements of the printing company. As a result, only the reduced sales incomes of the printing company were reported to the IRD. The sales incomes of 33 transactions of the printing company were reduced for the four years of assessment 2006/07 to 2009/10. The total underreported sales incomes were $12,885,531.99.

Tax evasion is a criminal offense under the Inland Revenue Ordinance. Upon conviction, the maximum penalty 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.

The conviction of a printing company, its director, and manager for tax evasion highlights the importance of complying with tax laws. Tax evasion is not only a crime, but it undermines the tax system's integrity, fairness, and sustainability. Taxpayers should accurately and honestly declare their income and pay taxes according to the law. The Inland Revenue Department will continue to pursue tax evaders and take action against those who attempt to evade tax obligations.


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