• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 5/9/2014

Hong Kong - Fraudulent conduct of directors blocks tax refund 

May 9:  The Court of Final Appeal issued a judgment in a case concerning whether the knowledge and fraudulent actions of company directors can be attributed to the company. The decision concludes that no tax refund can be paid because of such fraudulent conduct of the company directors. Moulin Global Eyecare Trading (in Liquidation) v. Commissioner of Inland Revenue (FAVC No. 5 of 2013).

The decision addresses when there is an over-assessment of profits tax payable by a company because the directors have fraudulently misstated financial accounts and amounts on the tax returns.

The issue resolved by the court was whether the knowledge of the fraudulent directors (i.e., in perpetuating the preparation of fraudulent financial accounts and tax returns) could be attributed to the company—with the court concluding that there could be no refund of tax due to such fraudulent conduct of the directors.

Read a May 2014 report prepared by the KPMG member firm in Hong Kong: No refund of tax paid due to fraudulent conduct of directors

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