Charitable Organisation Registration

Not all ‘voluntary’ or so-called ‘non-profit-making’ organisations are charities, however worthy their causes may be. Actually, there is no provision in the Inland Revenue Ordinance (IRO) which exempts a ‘voluntary’ or ‘non-profit-making’ organisation from tax. For an institution or a trust to be a tax-exempt charity, it must be established for purposes which are exclusively charitable according to law as listed below:

Relief of poverty
Advancement of education
Advancement of religion
Other purposes of a charitable nature beneficial to the Hong Kong community not falling under any of the above 3 categories.

If you would like to form a charitable organisation with the purpose falling into the above four heads, our specially designed package will be your good option. A popular way of establishing a charity is to form a company limited by guarantee under the Companies Ordinance of Hong Kong (Cap 32) that allows for greater transparency and legitimacy. Through our package, on top of helping you set up a company limited by guarantee, we will also assist in your tax exemption application by organizing all required documents and submitting the application to the Inland Revenue Department (IRD) for review under Section 88 of the IRO. Our experienced counsellors will manage your case and handle every procedure for you, while IRD will need around 6 months to determine whether your organisation can be accepted as a charitable institution for tax exemption purposes.

Service Package
Company name search
Certificate of Incorporation (includes HK$170 Government fees for number of members not exceeding 25)
Business Registration License (includes HK$2,250 Government fees)
20 copies of Articles of Association in English
Company chop, authorized signature stamp and common seal
Green Box with company name printed on
Assist in applying for tax exemption under Section 88 of the Inland Revenue Ordinance
Note:

Service fees: HK$18,000 for number of members not exceeding 25; if number of members exceeds 25, additional fees would be applied.

Minimum Requirements
2 members
2 directors
1 company secretary
* the same person can act as the role of member, director and company secretary at the same time.

Processing Time
Company limited by guarantee: approx. 1 month upon signed confirmation.
Result of tax exemption: approx. 6 months to get the result of tax exemption application from the IRD.

You probably have different questions about setting up a charitable organisation or how to fulfill Hong Kong tax exemption requirements. Here is a selection of the most frequently asked questions that may interest you:

Can you give me some examples of charitable purposes and non-charitable purposes of an organisation?
Below please find examples of purposes which the court had held to be charitable purposes:
- Relief of poor people
- Relief of victims of a particular disaster
- Relief of sickness
- Relief of physically and mentally disabled
- Establishment or maintenance of non-profit-making schools
- Provision of scholarships
- Diffusion of knowledge of particular academic subjects
- Establishment or maintenance of a church
- Establishment of religious institutions of a public character
- Prevention of cruelty to animals
- Protection and safeguarding of the environment or countryside
Below please find examples of purposes which the court had held to be non-charitable purposes:
- Attainment of a political object
- Promotion of the benefits of the founders or subscribers
- Provision of a playing field, recreation ground or scholarship fund for employees of a particular company or industry
- Encouragement of a particular sport such as angling or cricket
What are the tax advantages available to charity?
Here are some tax advantages accorded to charities by Hong Kong ordinances:
- Section 88 provides that charitable organisations or trusts of a public character are exempt from tax under the IRO.
- Proviso to Section 88 states that for the purpose of Profits Tax, if a charitable organisation or trust of a public character carries on a trade or business, the profits from such trade or business are exempted only if:
  - the profits are applied solely for charitable purposes, and
  - the profits are not expended substantially outside Hong Kong, and
  - either
    (A) the trade or business is exercised in the course of the actual carrying out of the expressed objects of the organisation or trust (e.g. a religious body might sell religious pamphlets);
    or
    (B) the work in connection with the trade or business is mainly carried on by persons for whose benefit such organisation or trust is established (e.g. a society for the protection of the deaf might arrange for the sale of handicrafts made by the deaf).
- Charitable, ecclesiastical or educational organisations of a public character are normally exempt from the obligation of business registration unless a trade or business is carried on. Where such an organisation carries on a trade or business, the exemption will only be granted if the conditions set out in Section 16(a) of the Business Registration Ordinance are satisfied. These conditions are similar to the conditions set out in the proviso to section 88 of the IRO as explained in the second point above.
Is the tax-exempt status of a charity subject to review?
The IRD is responsible for recognising charitable organisations or trusts for the purpose of granting exemption under the IRO. Thus, the department will, from time to time, call for accounting records, annual reports or other documents to review whether the organisation's objects are still charitable and its activities are compatible with its objects. The cycle of reviewing is approximately four years. It is therefore essential that a charity should maintain good management and proper accounting practice.

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