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Charity vs Non-Profit Organization in Hong Kong

Updated: Oct 1


Charity vs Non-Profit Organization in Hong Kong | Bestar
Charity vs Non-Profit Organization in Hong Kong | Bestar


Charity vs Non-Profit Organization in Hong Kong


Understanding the Difference


While the terms "charity" and "non-profit organization" are often used interchangeably, they have distinct meanings in Hong Kong.


Non-profit Organization (NPO) is a broader term encompassing any organization that operates for the benefit of the public or a specific group, without distributing profits to owners or investors. These organizations reinvest their funds back into their programs and services.


Charity is a specific type of NPO that meets certain criteria and is registered with the Hong Kong government. Charities are established for charitable purposes such as poverty relief, education, religion, etc.


Key Differences


  • Legal Status: All charities are NPOs, but not all NPOs are charities. Charities have specific legal requirements and regulations.

  • Tax Benefits: Only charities can apply for tax exemption and obtain tax-exempt status. Donations to tax-exempt charities are eligible for tax deductions.

  • Public Benefit: Charities must demonstrate a clear public benefit, while NPOs may have a broader range of objectives.


Examples of NPOs and Charities


  • NPOs: Community centers, environmental groups, professional associations, trade unions.

  • Charities: The Salvation Army, Oxfam Hong Kong, World Vision Hong Kong.


Importance of the Distinction


Understanding the difference between charities and NPOs is crucial for several reasons:


  • Donor Trust: Donors often prefer to support organizations with tax-exempt status.

  • Legal Compliance: Charities have specific legal obligations and reporting requirements.

  • Government Funding: Some government grants are specifically for charities.


Registering a Charity or NPO in Hong Kong


Understanding the Two Options


Before diving into the registration process, it's essential to clarify that there are two primary ways to establish a non-profit organization (NPO) in Hong Kong:


  1. As a Society under the Societies Ordinance: This is a more relaxed option suitable for smaller, informal groups or community-based organizations.

  2. As a Company Limited by Guarantee: This option provides a more formal structure and is often preferred for larger organizations or those seeking tax-exempt status.


Registering as a Society


To register as a society, you'll need to submit an application to the Societies Office of the Hong Kong Police Force. The process is relatively straightforward and involves providing basic information about your organization, such as its name, objectives, and membership.


Key steps:


  • Prepare a constitution outlining the organization's rules and regulations.

  • Submit the application form along with the required documents.

  • Pay the registration fee (typically nominal).


Registering as a Company Limited by Guarantee


Registering as a company limited by guarantee is a more complex process involving the Companies Registry. This structure offers more legal protection and flexibility but also requires more paperwork and compliance.


Key steps:


  • Prepare articles of association defining the company's structure and purpose.

  • Appoint directors and a company secretary.

  • Submit the incorporation form and other required documents to the Companies Registry.

  • Pay the registration fee.


Additional Considerations for Charities


If you aim to register as a charity, you'll need to meet specific criteria and register with the Inland Revenue Department (IRD) for tax exemption. The process involves demonstrating that your organization's purposes align with charitable objectives, such as poverty relief, education, or religion.


Key steps:


  • Meet the charity definition under the Inland Revenue Ordinance.

  • Prepare detailed information about your organization's activities and finances.

  • Submit an application to the IRD for tax exemption.


Important Notes


  • Timeframe: The registration process can take several weeks, depending on the complexity of your organization and the efficiency of government departments.

  • Ongoing Obligations: Once registered, your organization will have ongoing reporting and compliance obligations.


Fees and Timelines for Registering a Charity or NPO in Hong Kong


Registering as a Society


  • Fees: Typically nominal, but specific amounts can vary.

  • Timeline: Generally quicker than registering as a company, often taking a few weeks.


Registering as a Company Limited by Guarantee


  • Fees:

  • Incorporation fee: Varies based on authorized share capital.

  • Annual return fee: Depends on company size.

  • Other potential fees: For filing documents, changes in company information, etc.

  • Timeline: Can take several weeks, depending on the complexity of the application and the efficiency of the Companies Registry.


Registering as a Charity


  • Fees: No registration fee, but there may be costs associated with preparing documents and conducting due diligence.

  • Timeline: Obtaining tax-exempt status can be a lengthy process, often taking several months.


Additional Costs


  • Professional fees: If you hire a lawyer or accountant to assist with the registration process, there will be additional costs.

  • Office setup: Depending on your organization's needs, you may incur costs for office space, equipment, and utilities.


Factors Affecting Timelines


  • Completeness of documentation: Providing all required information accurately and promptly can expedite the process.

  • Government workload: The efficiency of government departments can impact processing times.

  • Complexity of the organization: Larger or more complex organizations may require additional time for review.


Important Considerations


  • Due Diligence: Conduct thorough research on the requirements and processes before starting the registration.

  • Ongoing Compliance: Be aware of the ongoing reporting and compliance obligations for your chosen legal structure.


Additional Resources


For more in-depth information, you can refer to the following resources:



How Bestar Can Help

Charity vs Non-Profit Organization in Hong Kong


Bestar brings unique expertise to the table, and our knowledge can be invaluable.


  • Compliance: Ensure that all activities adhere to relevant laws and regulations.

  • Contract Negotiation: Draft, review, and negotiate contracts to protect the organization's interests.

  • Corporate Governance: Advise on corporate structure and governance best practices.

  • Financial Reporting: Prepare financial statements and reports.

  • Tax Compliance: Ensure compliance with tax laws and regulations.

  • Financial Analysis: Analyze financial data to identify trends and opportunities.

  • Auditing: Conduct financial audits to verify accuracy and compliance.

  • Cost Control: Implement cost-saving measures and improve financial efficiency.

  • Mergers and Acquisitions: Provide financial advice during M&A transactions.

  • Valuation: Determine the value of assets and businesses.


How We Work


Bestar provides comprehensive solutions. For example:


  • Legal and Accounting: Working to ensure tax compliance, conduct financial audits, and manage legal and financial risks.

  • Accounting and Financial Experts: Collaborating to develop financial forecasts, analyze investment options, and manage financial performance.

  • Legal and Financial Experts: Working to structure complex financial transactions, manage legal and financial risks in mergers and acquisitions, and provide valuation advice.


Bestar can help organizations make informed decisions, mitigate risks, and achieve their financial goals.








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