Hong Kong Charity Tax Exemption Reviews: Section 88 Compliance Reminders for NGOs

A Legislative Council written reply published on 8 July 2026 provides an updated picture of Hong Kong's oversight of charitable organisations. As at 31 March 2026, there were 11,079 tax-exempt charities under section 88 of the Inland Revenue Ordinance. During 2025/26, 412 charities were newly exempted and 205 had their exemption status withdrawn.

What do the withdrawal figures mean?

The 205 withdrawals should not be treated as 205 compliance breaches. The official breakdown was: 106 charities dissolved or wound up, 24 ceased operation or became dormant, 74 did not respond to the Inland Revenue Department (IRD) or were untraceable, and one no longer qualified as a charitable institution or trust of a public character. The IRD does not maintain a breakdown of withdrawals specifically arising from failure to pass regular reviews.

How does the IRD review charities?

The IRD reviews whether an organisation's objects remain charitable and whether its activities are compatible with those stated objects. Each case is considered on its own facts and circumstances. Section 88 tax exemption also requires the relevant statutory conditions to be met, including rules on applying profits solely for charitable purposes and restrictions concerning expenditure outside Hong Kong and trading activities.

Practical records for charities and NGOs

• Keep governing documents, board resolutions and programme records aligned with the stated charitable objects.
• Maintain complete income, expenditure, donation and supporting records, together with audited financial statements where applicable.
• Respond promptly to IRD enquiries and keep contact and registration particulars current.
• For public-place fundraising, identify the relevant permit or licence requirements. Depending on the activity, the responsible department may require an income and expenditure statement and an auditor's report prepared and certified by a professional accountant.

Is a charity commission being established?

No new commission or timetable was announced in the reply. The Government said it would continue to review the suitability and timing of such an arrangement. This is a statement of the current regulatory position, not a new law.

Source: https://www.ird.gov.hk/eng/ppr/archives/26070801.htm

This article provides general information only and does not constitute accounting, tax or legal advice. Organisations should review their governing documents, activities and applicable permit conditions, and seek professional advice for their circumstances.