For many years, news in newspapers have reported, cases of tax evasion allegations. These tax payers were adjudged imprisonment but were mostly “small shrimps”. The taxes and fines were not exceeding one million, comparing to an average of over two million per case per year, let alone those that are concluded in millions of dollars. Why would taxpayers be sentenced to prison? Based on the anther’s experience, the reasons for having such punishment may be as follows:

1. The taxpayer is just opinionative, thinking that he is smart and capable, and nothing cannot be solved. Then he confront with the tax officers, refuses to admit his mistake, and refuses to compromise;
2. The taxpayer has “benevolent people” around, such as lawyers, senior connsels, and high-ranking people among relatives and friends giving opinions, insisting that their tax data and explanations are correct, ignoring the power of the IRD and the way of doing things;
3. The tax officials have solid evidence (for example: false salary to family members without MPF, false bills), have given the taxpayer an opportunity to admit his mistake, pay taxes and fines (the discretionary power under the Inland Revenue Ordinance 82A), but the taxpayer insists because of his stubborn character, refuses to accept and refuses to compromise.

Why were most (95% or more) investigation cases not being accused in court? The reasons for these situations are quite obvious:

1. Employing experienced and knowledgeable tax investigation accountant as a tax representative, not hiring lawyers or other professionals. The tax representative negotiates with tax officials based on his expertise and experience;
2. The taxpayer shows a sincere and cooperative attitude from the beginning to solve the problem and gain the recognition of the tax officers;
3. Open and honest, providing all possible accurate information and explanations, hoping that the investigation officers will accept;
4. Quick submission, willing to communicate, reasonably compromise, and end the case as soon as possible.

Because the Commissioner of the Inland Revenue (who actually authorizes his subordinates, the investigation officers) to use the discretion provided by section 82A of the IRO to impose fines instead of prosecution.  Therefore, most cases are concluded under this regulation, and the taxpayers eventually pay to close the cases.

Is it to deal with one’s own opinionative character, or by sincere cooperation? Is it better being jailed, or to continue living in peace and comfort by paying penalty? The answer is obvious!