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Hong Kong Investments in Hong Kong Hong Kong Recognized Charitable Organization S88 License Application Guide
KNOWLEDGE|
(1) |
Established Solely for Charitable Purposes The organization must be entirely dedicated to one or more of the four legally recognized charitable categories: (i) Relief of poverty (ii) Advancement of education (iii) Promotion of religion (iv) Other purposes beneficial to Hong Kong society or the public |
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(2) |
Serving the Public Interest
Charitable activities must benefit the public or a reasonably defined section of the public. They must align with public interest and cannot be restricted to private or affiliated groups, such as a single family, a specific closed community, or employees of a particular company.
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(3) |
Compliance with National Security Obligations
The organization must not engage in or support any activities detrimental to national security. Groups established to pursue political objectives — including promoting party interests, seeking legal amendments, or attempting to overturn government policies — are categorically excluded from charitable recognition. This requirement was introduced in the 2021 amendment and is now a core condition. The Inland Revenue Department conducts periodic reviews to ensure ongoing compliance.
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No. |
Charitable Purpose |
Examples from Court Rulings |
Restrictions |
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1 |
Relief of Poverty |
Assisting persons in poverty |
No geographical restriction; charitable activities may be carried out anywhere in the world |
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Helping victims of special disasters |
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2 |
Advancement of Education |
Establishing or operating non-profit schools |
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Providing scholarships |
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Disseminating knowledge in specific subjects |
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3 |
Promotion of Religion |
Establishing or operating churches |
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Setting up religious institutions of a public nature |
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4 |
Other Charitable Purposes Beneficial to Hong Kong Society |
Assisting the sicks |
Charitable purposes must be beneficial to Hong Kong society |
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Helping persons with physical or intellectual disabilities |
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Preventing cruelty to animals |
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Protecting the environment or countryside |
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Promoting health |
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(1) |
Entity Qualification: Legally Established Structure (a) The organization must be formed under a lawful and compliant legal framework. (b) Common structures include charitable trusts, incorporated associations, and most frequently, companies limited by guarantee. The majority of recognized tax exempt charities in Hong Kong are companies limited by guarantee. (c) Different structures require different governing documents:
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(2) |
Clear Purpose: Purely Charitable, No Non Charitable Objectives (a) The organization’s purposes must fall entirely within the four charitable categories outlined earlier: relief of poverty, advancement of education, promotion of religion, or other purposes beneficial to Hong Kong society. The wording must be clear and specific, without including non charitable objectives such as commercial profit or political activity. (b) If the purpose involves “other purposes beneficial to the public,” it must be shown to directly benefit Hong Kong society and provide identifiable public interest, such as promoting environmental protection or fostering community support. (c) Governing documents must explicitly state the charitable purposes and must not contain clauses allowing funds to be used for non charitable purposes or for the benefit of founders or donors |
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(3) |
Operational Requirements: Transparent and Purpose Driven (a) The daily activities of the charitable organisations must primarily revolve around the charitable purposes. All funds and resources must be used to advance those purposes (as stated in their Articles of Associations or constitution) and not diverted elsewhere. (b) A sound governance structure (e.g., board of directors or council) must be established to ensure proper decision making, with clear financial management systems that record income and expenditure accurately. (c) The organization must not engage in profit making commercial activities, unless such activities directly further the charitable purposes and are not the main focus. (d) Fundraising activities must comply with relevant regulations, and all proceeds must be applied to charitable purposes. No unreasonable remuneration may be extracted. (e) Once recognized, the organization must submit annual accounts and reports as required by the IRD. Any changes, such as adjustments to charitable purposes or changes in governance personnel, must be reported promptly. The organization must also cooperate with the Department’s compliance reviews. |
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No. |
Description |
Time (Day) |
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1 |
Preliminary Stage |
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Amendment of Articles of Association |
5 |
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Preparation of the required application documents, including: · Registration documents of the organization’s legal entity · Governing documents (e.g., Articles of Association, trust deed, constitution) · Detailed statement of charitable purposes · Documentation of financial control systems · Annual activity plan and other relevant materials |
Subject to actual circumstances |
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2 |
Filing of Application |
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Submission of the application materials to the IRD. |
1-2 |
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3 |
Assessment by IRD |
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Upon receipt of an application, the IRD will first check whether the submitted materials are sufficient to make an assessment.
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4 months up (The timeframe is subject to the actual approval process) |
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4 |
Approval of Application |
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Once the application has been approved, the IRD will confirm the organization’s tax‑exempt status. The organization’s name will then be included in the “List of Charitable Institutions and Trusts of a Public Character Exempt from Tax under Section 88 of the Inland Revenue Ordinance”, thereby officially becoming a recognized charitable organization. |
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Total |
5-6 months |
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(1) |
Charitable Organizations Under Section 88 of the IRO, companies limited by guarantee that obtaining an S88 license are exempt from paying profits tax and business registration fee. However: (a) If the charity operates industries or businesses unrelated to its charitable purposes, the profits generated are still subject to profits tax. (b) If income is not applied to charitable purposes, or is distributed to its members, the exemption does not apply and profits tax must be paid. |
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(2) |
Donors Individuals or corporations making cash donations to recognized charitable organizations may claim tax deductions, subject to the following restrictions: (a) The total annual donation amount deductible must not exceed 35% of the individual’s assessable income or the corporation’s assessable profits. In addition, each donation and the total annual donation must not be less than HK$100. (b) Married couples may, under regulatory conditions, apply to deduct any unused donation balance from their spouse. (c) Donors must properly retain donation receipts for at least six years for possible inspection by the IRD. Donations without valid receipts cannot be claimed for tax deduction. |
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(1) |
Periodic Review
The IRD conducts a review of recognized charitable organizations every four years to verify whether their purposes and activities continue to meet the required standards. If violations are found (such as deviation from charitable purposes, misappropriation of funds, or activities harmful to national security), the organization’s recognition will be revoked, and a notice of additional tax assessment may be issued.
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(2) |
Information Disclosure
Charitable organizations must cooperate with the IRD’s inspections. Upon receiving an inquiry from the IRD, they must respond within the specified timeframe (usually one month) and provide the requested explanations or documents. If there are changes to the organization’s name, purposes, or governing personnel, the IRD must be notified promptly.
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(3) |
Prohibited Activities A charitable organization must not: (a) Engage in profit‑making commercial activities (unless such activities directly further the charitable purposes and are not the main purpose). (b) Use charitable funds for non‑charitable purposes. (c) Conduct political activities or engage in activities harmful to national security. Violation of these rules will result in revocation of recognition and may lead to legal liability. |
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(4) |
Revocation of Qualification
If the IRD determines that a charitable organization no longer meets the recognition criteria, it will first notify the organization of corrective actions that may be taken. If the organization fails to implement corrective measures in line with the IRD’s requirements, its charitable status will be revoked. If the organization disagrees with the revocation decision, it may lodge an objection through existing tax appeal channels or pursue other legal remedies.
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Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |
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