LCQ19: Regulating charitable organisations

On 08 Jul 2026, in response to a Legislative Council question posed by Professor the Hon Alex Fan, the Secretary for Home and Youth Affairs, Miss Alice Mak, issued a written reply concerning the regulatory framework for charitable organisations. This response covered critical areas including transparency, accountability, tax exemption status, and fundraising standards governed by the Inland Revenue Ordinance (Cap. 112).

Tax Exemption Requirements and Statistical Overview

Under section 88 of the Inland Revenue Ordinance (Cap. 112), charities must satisfy specific conditions to qualify for tax exemption, including the application of profits solely for charitable purposes, ensuring profits are not substantially expended outside Hong Kong, and conducting trade or business in line with charitable objects or by beneficiaries. Over the past five financial years, the total count of tax-exempt charities fluctuated, with 2021/22 recording 9709 total, 446 new, 222 withdrawn; 2022/23 at 10042 total, 532 new, 240 withdrawn; 2023/24 at 10516 total, 649 new, 221 withdrawn; 2024/25 at 10849 total, 584 new, 285 withdrawn; and 2025/26 at 11079 total, 412 new, 205 withdrawn.

Withdrawal reasons for tax exemption status over the same period primarily involved dissolution, dormancy, or untraceability, with specific figures ranging from 106 to 144 dissolved entities annually and 24 to 27 becoming dormant, alongside significant numbers failing to respond to enquiries. The Inland Revenue Department ("IRD") does not maintain a specific breakdown regarding withdrawals due to failed regular reviews. In processing applications, the IRD references common law cases to determine charitable status and public benefit, conducting regular reviews to ensure activities remain compatible with stated objects, while updating the Tax Guide for Charitable Institutions and Trusts as necessary without encountering interpretation issues.

Fundraising Regulation and Transparency Initiatives

Referencing the Law Reform Commission Report of December 2013, the Government implemented administrative measures since 2018 to enhance fundraising transparency, including uploading audited accounts to GovHK, issuing a Good Practice Guide, and establishing a dedicated hotline. While the LRC noted no broad consensus on a charity commission following 2011 consultations, the Government continues to review the recommendation's suitability. Currently, public fundraising requires permits from the Food and Environmental Hygiene Department ("FEHD"), Social Welfare Department ("SWD"), or Home Affairs Department; FEHD issues temporary hawker licences for on-street sales limited to five days within two weeks to ensure hygiene and prevent obstruction, noting these small-scale activities do not qualify for tax deductions.

In light of Audit Commission and Public Accounts Committee recommendations, the FEHD introduced new licensing conditions in 2018 regarding fund safekeeping and financial accountability. Furthermore, the Government has consolidated information on charitable fundraising activities on the dedicated GovHK page since 2018, facilitating public access to audited accounts, activity types, the Good Practice Guide, and practical departmental guidelines for organizations intending to conduct charitable activities.