Establishing a charity in Hong Kong involves meeting specific requirements, especially in the wake of increased demand for philanthropic planning post-pandemic. Enterprises, social organizations, religious groups, and individuals are keen on aiding vulnerable groups effectively. The process includes understanding establishment prerequisites, organizational structures, compliance, governance, obligations, and tax-exemption.
While Hong Kong lacks specific laws governing charity registration and operations, the Inland Revenue Department provides crucial guidelines in the Tax Guide for Charitable Institutions and Trusts of a Public Character, initially issued in the 1980s. This guide, periodically updated, offers insights on taxation and related charity/trust matters, with the latest revision in September 2021.
The essential requirements for setting up a legal charity in Hong Kong encompass establishing the institution solely for charitable purposes, ensuring identifiable public benefit, and complying with the law to safeguard national security. Charities must operate for charitable work only and refrain from illegal or security-threatening activities, aligning with the revised guidelines following the implementation of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region.
Prior to establishing a charity, founders must define the organization’s purpose and select an appropriate structure based on practicality and intent. Common structures include charitable trusts, societies, corporations (including companies limited by guarantee), and statutory bodies. Most charities in Hong Kong opt for companies limited by guarantee due to their transparency, operational regulations, requirement for audited financial statements, and non-profit orientation.
Setting up a company limited by guarantee involves choosing a name, submitting necessary forms and documents to the Companies Registry, and paying the registration fee. Once approved, the charity receives a certificate of incorporation and business registration, simplifying the process. However, additional steps are required to apply for tax exemption from the Inland Revenue Department.
Before proceeding with charity establishment, organizations must ensure compliance with guidelines, understand operational structures, and evaluate governance policies. This preparatory phase sets the stage for subsequent compliance requirements, which will be detailed in the next part of this series, offering a comprehensive guide for aspiring philanthropic entities in Hong Kong.
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