TSL makes $26m provision amid probe
Jewellery retailer Tse Sui Luen Jewellery (International) has warned of tax liabilities and penalties in conjunction with a continuing anti-corruption probe and related allegations of tax evasion.
The warning came after the group said it would set aside $26 million in provisions for possible liabilities in the year to February, and a $13 million provision for the previous year.
Chairman Tommy Tse Tat-fung, his father and former chairman Tse Sui-luen, a former deputy chairman and three company managers were arrested by the Independent Commission Against Corruption (ICAC) in April for allegedly offering bribes to employees at several travel agencies in exchange for taking tour groups to the company's shops. They were later released.
The bribes were the subject of a dispute between the group and the Inland Revenue Department, which issued a demand for an additional $12 million in taxes for the end-February fiscal year. The group was also asked to pay $13 million for fiscal 2003-04 in relation to certain offshore income, agent commission payments and promoter fees deriving from previous years.
The group said it was compiling information to contest the department's claims. Although it was too early to say, the group said potential penalties could reach three times the amount of any tax under-reported.
Tommy Tse yesterday said that the probe was unlikely to adversely affect Tse Sui Luen's sales or daily operations.
The group's reported net profit for last year jumped to $38.01 million from $7.49 million the previous year. Turnover rose 33.52 per cent to $1.27 billion.
In light of the tax dispute and the ICAC probe, the group's auditors registered a qualified opinion on its financial statement.