Hong Kong Tax Evasion Case of Hau Hung-ping

In mainland China, tax evasion by celebrities and livestreamers often involves sums in the hundreds of millions. While the penalties are severe, offenders can usually avoid imprisonment or any criminal liability as long as they pay the fines. However, things are entirely different in Hong Kong. Even evading a few tens of thousands of Hong Kong dollars could result in criminal charges, and offenders may face jail time.

According to Article 63 of the Tax Collection and Administration Law of the People's Republic of China:

Tax authorities shall recover unpaid or underpaid taxes and late payment surcharges from taxpayers who evade taxes. Additionally, taxpayers will be fined no less than 50% and no more than five times the unpaid or underpaid taxes. If the offense constitutes a crime, criminal liability shall be pursued in accordance with the law.

According to Article 201 of the Criminal Law of the People's Republic of China:

Taxpayers who use deceitful or concealing methods to file false tax returns or fail to file tax returns, thereby evading a significant amount of taxes amounting to more than 10% of the payable tax, shall be sentenced to imprisonment of up to three years or criminal detention, and fined. If the amount of evaded taxes is exceptionally large and exceeds 30% of the payable tax, the sentence shall be three to seven years of imprisonment, along with a fine. Withholding agents who commit similar acts shall be punished under the same provisions.

However, Paragraph 4 of Article 201 explicitly states that if the taxpayer pays the overdue taxes, late payment surcharges, and administrative penalties after receiving a notice from the tax authority, criminal liability will not be pursued. This exception does not apply to individuals who have been criminally punished for tax evasion or administratively penalized for tax evasion twice or more within five years.

In simpler terms, even if the amount of tax evasion is enormous, first-time offenders in mainland China can avoid criminal liability—and therefore imprisonment—by paying their dues.

In contrast, under Section 82(1A) of Hong Kong's Inland Revenue Ordinance (IRO), any person convicted of tax evasion faces the following penalties:

• (a) On summary conviction:
  1. A fine at Level 3 (HK$10,000);
  2. A penalty equal to three times the amount of underpaid tax; and
  3. Imprisonment for six months.
• (b) On conviction upon indictment:
  1. A fine at Level 5 (HK$50,000);
  2. A penalty equal to three times the amount of underpaid tax; and
  3. Imprisonment for three years.

That said, being caught for tax evasion in Hong Kong does not necessarily mean imprisonment. Under Section 82(2) of the IRO, the Commissioner of Inland Revenue has the discretion to compound tax evasion offenses by imposing a fine instead of prosecuting the offender. The Commissioner may also withdraw legal proceedings before a judgment is issued by the court. However, this is entirely at the discretion of the Commissioner, and tax evaders have no say in the matter. This contrasts with mainland China, where meeting certain conditions guarantees exemption from criminal liability.

Thus, while Hong Kong is internationally renowned as a tax haven, it does not tolerate tax evasion. Even if the amount involved is as little as a few tens of thousands of dollars, the consequences can often be more severe than in mainland China. Low tax rates in Hong Kong do not equate to leniency in enforcement.

One high-profile example is the case of former Miss Hong Kong runner-up Hau Hung-ping (third place in 1982), who was sentenced to nine months in prison in July 2022 for evading HK$86,849 (approximately RMB 79,000) in taxes. Let’s examine how she evaded taxes and why such a relatively small amount led to imprisonment.