Cash in hand and non registration of an employee

Posted by good golly (366 days ago)

If a large company had many "sub locations" and employed people part time and basically paid them "cash in hand" without contributing MPF or registering the employee and the employee worked for the company for many years receiving the money how much trouble would they get into.
When is it considered "tax avoidence" and is there a way for an individual to notify IR without being a whistle blower. Are both parties liable to prosecution or does IR not really care in the least!

(I am based in Hong Kong)

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Posted by WoDer (366 days ago)

how you know that the company didn't fill the tax return from the employees?

(I am based in Hong Kong)

Posted by associates (365 days ago)

Two points:

MPF contributions are payable either by industry - such as construction - or by how long a person is employed under a continuous contract of employment. If the former, MPF contributions must be made by the employer to an MPF Industry Fund within 10 days of a daily cash payment or else deduct 10% from the daily pay and pay it to an MPF Industry Fund.. If the latter, MPF is compulsorily payable after 3 months of a continuous contract - part time or not. The MPFA is the regulator, not the IRD. The telephone number to call is 2918 0102.

It is a criminal offence for an employer to avoid reporting employee pay to IRD. The IRD will prosecute and the employer can expect to be imprisoned for up to 12 months, possibly longer in a serious case. The IRD telephone number is 2594 5000. The employee must complete a Salaries Tax form each tax year (ending 31 March) irrespective of how little he earns. Not doing so is also a criminal offence but the penalties are lighter, depending on the seriousness of the offence and the amounts involved. The IRD is unlikley to prosecute for earnings of less than HKD100,000 per annum because that is the tax-free allowance for each person.

Weir & Associates
Solicitors & Notaries
2108 Gloucester Tower
The Landmark
15 Queens Road Central
Hong Kong
Tel : 2526-1767
Fax : 2868-3568
email : weirlaw@hongkonglaw.com
www.HongKongLaw.com/weirlaw

(I am based in Hong Kong)

Posted by good golly (365 days ago)

Thank you associates, I thought as much.

(I am based in Hong Kong)