Caritative company in Hong Kong, not an easy setup!

A Hong Kong non-profit organisation also presented as a caritative company in Hong Kong obey to the following rules:

  • Must be established for charitable purpose and for public benefit
  • The charitable purposes being classified in four distinct areas, charitable nature for the benefit of the Hong Kong community, advancement of a religion, advancement of education and last but not least relief of poverty.
  • It should be recognized by the Hong Kong Inland Revenue Department, the department will not consider as charitable purpose: encouragement of a particular sport, provision of playing field or scholarship for a particular industry or company, attainment of a political object.

In order to benefit from a tax exemption, the caritative company in Hong Kong should submit to the IRD an application with list of activities planned for the next 12 months as well as the draft incorporation statutory returns and the draft articles of association.

This long process, up to six months before COVID 19 disturbances, should satisfy the IRD with the below criteria:

  1. Precise and clear entity’s objectives
  2. Limiting the application of funds to its stated objectives
  3. Prohibiting distribution of funds/assets amongst its members
  4. Prohibiting directors from receiving remuneration and avoiding any conflicts of interests
  5. Specify another charity for the remaining assets if the caritative company in Hong Kong engage with a dissolution

It’s crucial for the Hong Kong non-profit organisation to not receive any donation before the section 88 tax exemption status has been granted.

The process to setup a caritative company in Hong Kong.

  1. Using a limited by guarantee company with at least two members, two directors, one company secretary and later on one auditor but first
  2. Prepare custom drafting of articles of association
  3. Obtain the IRD approval then register the limited by guarantee company, requesting the dispense of the world limited is also an option.

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