Charities in Hong Kong: Section 88 Tax Exemption Status and Related Matters

If your charitable organization holds tax exemption status under Section 88 of the Inland Revenue Ordinance, it is important to be aware of the ongoing compliance requirements that must be fulfilled to maintain that status. In addition, a charity’s Section 88 status does not guarantee that all of its income will be tax-exempt, so it is important to understand the specific conditions for tax exemption before embarking on revenue-generating activities.  

With the contribution from Ernst & Young (EY), PILnet has created a practical guide on these topics, covering the ongoing compliance requirements for Section 88 organizations (e.g. notification and reporting obligations owed to the Inland Revenue Department), the conditions for income to be tax-exempt, and practical tips for charitable organizations. 

powered by Advanced iFrame

The post Charities in Hong Kong: Section 88 Tax Exemption Status and Related Matters (PILnet) appeared first on Foundation for Shared Impact.

The post Insurance Guide for Social Impact Organizations appeared first on Foundation for Shared Impact.

Business Registration Ordinance (Cap.310) 
A business registration application shall be made within 1 month of the coming into operation.

Step 1: Select a Business Name

Every registered business should have a legal name. A business may be registered with an English name, a Chinese name, or an English and a Chinese name. Pay attention to the rules below when selecting your name.

• The name should not suggest a connection with the Government or any public body when no such connection exists or has existed.
• The name should neither infringe on trademarks nor be offensive or otherwise contrary to public interest.

Rules for naming

Name in Chinese

• Latin alphabets may be used, but English words are not allowed.
• Besides Chinese character and Latin alphabets, only the following listed special characters are allowed to use in Chinese names.

Name in English

• Only the following listed special characters are allowed to use in English names

Notes

• A name suggesting that the business is incorporated with limited liability when it is not is disallowed.
• A name which suggests a connection with the Government or any public body is disallowed.
• Multiple names for one business is permissible. Each registered additional business name will be treated as a branch of the business

Step 2: Prepare the Required Documents

For the registration of a sole proprietorship, the following documents are required:

• The application form
  • Form is on request by
  1. E-mailing to taxbro@ird.gov.hk with a completed form IRBR194 (available here: https://www.ird.gov.hk/eng/pdf/irbr194.pdf), or
  2. Writing by post or by fax (2824 1482) to the Business Registration Office. The application forms will be sent to you by post, or
  3. Obtaining in person at the Business Registration Office at 2/F, Inland Revenue Centre, 5 Concorde Road, Kai Tak, Kowloon, Hong Kong (Enquiry telephone number: 187 8088)
     
     NOTE: please note that based on experience, it may take up to 30 days to receive the application form by email or post. Should you need the form immediately, we recommend you to visit the Business Registration Office in person.
     
• An official specimen here: https://www.ird.gov.hk/eng/pdf/br_form1a_e.pdf
• Hong Kong Identity Card (for Hong Kong residents) / Passports (for non-residents)’

Step 3: Submit the Documents

1. By post to Business Registration Office, Inland Revenue Department, 2/F, Inland Revenue Centre, 5 Concorde Road, Kai Tak, Kowloon, Hong Kong. Underpaid mail will be rejected.
2. Submit online via eTAX View online demo for application here (you need to have the Individual Tax Portal account)
3. Submit in person to the Business Registration Office at 2/F, Inland Revenue Centre, 5 Concorde Road, Kai Tak, Kowloon, Hong Kong (Enquiry telephone number: 187 8088)
   
   NOTE: Make sure you make an appointment before visiting the Business Registration Office to avoid long waiting time. Users of business registration counter services can make appointments for the same day and the next 5 working days through the Online Appointment Booking Service.

Step 4: Collect your certificate

Notes for Non-Residents of HK

If you are foreign to Hong Kong but want to establish a business in the form of sole proprietorship, you should first apply for the Investment visa.

• For more information, please refer to the immigration department’s official website. https://www.immd.gov.hk/eng/services/visas/investment.html

To successfully acquire an Investment Visa, you should prove that you are going to make a substantial contribution to the Hong Kong. But due to the restrictions of sole proprietorship, there is little scope of satisfying these requirements.

Alternatively, business professionals may incorporate a company to unleash the business’s potential. For more information on incorporating a company in Hong Kong, please refer to our relevant guide.

Additional Readings:

• [Official] Business Registration by Inland Revenue Department

“Business” Required to be Registered and Application for Business Registration

PS!

At FSI we’re always seeking to improve, so if you have any feedback on this guide/template, please do not hesitate to let us know.

The post Guide to Establishing a Sole Proprietorship in Hong Kong appeared first on Foundation for Shared Impact.

About E-Registry

Introduction

E-registry is a 24-hour portal developed by the Companies Registry, Hong Kong, to facilitate the electronic submission of applications for incorporation of local companies, applications for registration of non-Hong Kong companies, specified forms, and related documents, including the Annual Return (NAR1).

Its service is available to all registered companies in Hong Kong.

Why should I register?

E-registry mainly serves two purposes, easy document submission, and its relevant services. The portal saves the companies’ efforts and time on periodic document submission and keeps them aware of the next NAR1 submission date. Therefore, it is highly recommended that companies should register for their own accounts.

Meanwhile, one point to add, the portal’s service only covers the companies’ side, and it will not provide much convenience for partnership or sole proprietorship owners.

The two sections below will elaborate on its two purposes.

1. Document submission

The E-registry is a portal made primarily devised for the convenience of the online submission of documents. However, only the submission or rectification of specific documents are accepted through E-registry and the submission can only be done by individual users. Thus, a company is required to first appoint an individual user for the submission.

Following is a full list of accepted documents. Those not in the list should otherwise be delivered to the Registry via hardcopy form.

• Documents accepted
  • For incorporation and registration
    • NC1 – Incorporation Form (Company Limited by Shares)
    • NC1G – Incorporation Form (Company Not Limited by Shares)
    • NC3 – Consent to Act as First Director
    • IRBR1 – Notification to Business Registration Office
    • Copy of Memorandum and Articles of Association
  • Documents for reporting changes in company information
    • ND2A – Notification of Change of Secretary and Director (Appointment/Cessation)
    • ND2B – Notification of Change of Particulars of Secretary and Director
    • ND4 – Notification of Resignation of Secretary and Director
    • ND5 – Notification of Reserve Director (Nomination/Cessation)
    • ND6 – Acceptance of Nomination as Reserve Director
    • ND7 – Notification of Change of Particulars of Reserve Director
    • ND8 – Notification of Resignation of Reserve Director
    • NNC2 – Notification of Change of Company Name
    • NR1 – Notification of Change of Address of Registered Office
    • NSC1 – Return of Allotments
    • NSC4 – Notification of Increase in Nominal Share Capital

• NAR1 – Annual returns

Relevant Services

Besides an easy portal for document submission, E-registry also provides integrated notification services for the registered users. Services include (Click the toggle to view in detail)

• Annual Return e-Reminder Service
  • Electronic notifications for delivering annual returns before the deadline
  • Free of charge
• Third Party Software Interface (“TPSI”) Service
  • Registered users can use the TPSI Service to submit their duly completed and signed electronic files of specified forms which are generated by third-party software in specified interface file formats with or without attachments, to the Companies Registry.
  • Simply put, it is a service to allow third-party software to edit and submit the files to the Registry
• Registration of Registered Agent Service
  • An RA can be a company or a natural person. An RA, who has registered at the e-Registry, must be authorised and appointed by his/her/its appointer before the RA can act on behalf of the appointer for the purpose of electronic filing at the e-Registry. This free service is for the appointment of a registered agent (RA)

Account Classification

E-Registry accounts are classified into two kinds, namely individual accounts and company accounts.

• For the individual account, anyone wishing to use the E-Registry service may register for one. The natural person and the person who is authorised for document delivery on behalf of a company must register for an individual account.
• For the company account, only eligible business entities (i.e. local or non-Hong Kong companies registered with Companies Registry and unincorporated companies registered with Inland Revenue Department) can register for one. The company must appoint an authorised individual account before any submission of documents.

Registering for E-Registry

Start the Registration

Click here to enter the user registration portal.

Step 1 Setting Account Information

1. Setting user ID, password and the password hint question
2. Choose the user type: individual or company

For creating a company account, make sure that the director have already had an individual account that can be linked to the company account.

3. Provide the appointment reference number for company registration

Step 2 Fill out Personal Particulars (for Individual Account)

1. Provide personal particulars
2. Provide identity proof
   • Identity proof accepted
     • Use Digital Certificate
       • Two forms of certificates are accepted: H.K. Post e-Cert certificate / personal ID-Cert from Digi-Sign Certification Services Limited
       • Upload the file and the pin
       • Beware of personal data leakage

• Certified True Copy of Identification Document
• Hardcopies (Submit in person)
  • Address: Companies Registry Public Search Centre 13th floor, High Block, Queensway Government offices, 66 Queensway, Hong Kong
  • Service hours: Monday to Friday 8:45 – 17:30 (closed on public holidays)

Step 2 Fill out Company Particulars (for Company Account)

1. Select the type of company
2. Provide the Company No. and Company Code and retrieve for validation”

Step 3 Review and Submit

Review the information provided and submit the application.

Appendix: CR eFiling – E-Registry Mobile App

CR eFiling is a mobile app enables access to E-Registry services on portable devices. There is a form filling tool named e-Form integrated in the app. Users can fill out the forms with the help of e-Form, and submit directly upon completion.

Download

For iOS users, search in app store CR eFiling or scan the following QR code

For Android users,

FSI’s Alert Service [TBC]

• Afraid of having the compliance stuff overdue and want a reminder? Fill out the form here to get alert for compliance issues from FSI before deadlines.[TBC]

Additional Readings:

• [Official] E-Registry Service Intro
• [Official] Specified Form Companies Registry
• [Official] User Registration Guide by Companies Registry

PS!

At FSI we’re always seeking to improve, so if you have any feedback on this guide/template, please do not hesitate to let us know.

The post Guide to E-Registry (Hong Kong) appeared first on Foundation for Shared Impact.

Non-profit organisations, abbreviated as NPO, refer to the organisations that are organised to operate for collective, public, or social benefits, not for the interest of the organisations’ owners or investors. Non-profit organisations do not distribute their profits to their owners or investors, but they always re-invest the funds back into their programs, services, or research beneficial to their social cause.

Note that NPO is not equivalent to a charity in Hong Kong, and charities (Section 88) are a subset of NPOs.

Constraints of an NPO

• Non-distribution constraintAny revenues incurred that exceed expenses must be used in line with the collective, public, or social interest, or to the development of the organisation, but not to any private parties.

Responsibilities of an NPO

• AccountabilityAn NPO should shoulder their responsibility for society as promised and be accountable for the social impacts they are creating and their donors and volunteers.
• TrustworthinessAn NPO should be trustworthy and honest about its missions and schemes.
• OpennessThe financial statements should be disclosed on a regular basis to inform your donors what social benefits their money has created.

Advantages of an NPO

• Tax exemption, if eligible – learn more here from our guide to Charities and Tax Exemption (S88) in Hong Kong.
• Limited liabilityIf you establish your charitable cause as an NPO in the form of either a company or a society, it becomes a legal entity, which is separated from you and has limited liability.
• Legal entrySince your cause is legally recognised, it has legal entry to settle any disputes.
• Public and private grantsAs an NPO, you may be eligible to apply for public and private grants by external funders to finance your operational or project-based expenses.

Establish an NPO as a company

It is common practice for an NPO in Hong Kong to incorporate into a local limited company as a vehicle of the organisation to better function and fulfil their missions. There are two types of companies to incorporate – limited by shares, or limited by guarantee. NPO operators usually opt for the latter, for it has no requirements of shareholders and the operating profits are retained within the organisation

💡 Cap.622 Companies Ordinance Company limited by guarantee (1) For the purposes of this Ordinance, a company is a company limited by guarantee if—
(a) it does not have a share capital; and
(b) the liability of its members is limited by the company’s articles to the amount that the members undertake, by those articles, to contribute to the assets of the company in the event of its being wound up.

For further steps of company registration, please refer to Step 2 – 4 in the corporation guide.

Establish a Society

You can consider establishing a Society instead of a Company, with the Societies Office of the Societies Office of Hong Kong Police Force. Usually, the less-formal associations or social groups choose to register as a Society as it involves less administrative procedures and can be less expensive. However, note that the members of the management committee of the Society, or sometimes the members of the Society themselves may incur personal liability.

Required Documents

1. Application form – downloadable here
2. Copies of HKID Cards or other valid identity documents;
3. Document to prove the place of business of the Society;
4. Consent letter with clear copy of HKID card or other valid identity document from the lawful occupier of the premises (if applicable);
5. Constitution, articles of association or minutes of a meeting, to establish the society and show the objects and purposes of the society;
6. Relevant qualification of the office bearers (e.g. certificates, if any);
7. Consent letter for the name of the society (if applicable).

Submission of Documents

Submission of the application should be sent to the Police Licensing Office within one month after the society’s establishment.

Collecting certificates

• Given sufficient information received for the registration, the society concerned will receive an acknowledgement together with a “Certification of Registration of a Society” or “Certificate of Exemption from Registration of a Society” within 12 working days after the submission.
• An official sample is provided here.

Apply for the tax exemption status

• Certain types of non-profit organisations are eligible to obtain a tax exemption status. Follow our guide on the application.

Additional Readings:

• https://startupregistry.hk/services/limited-by-guarantee/
• https://sleek.com/hk/resources/setting-up-a-nonprofit-company-in-hong-kong/
• [Official] Registration of a Society by Hong Kong Police ForceAbout Registration of a Society
• Non-Profit Organisation in Hong Kong: The Complete Guide by startupr.hkhttps://blog.startupr.hk/non-profit-organization-hong-kong-complete-guide/
• Companies Ordinance (Cap.622)Hong Kong e-Legislation
• Societies Ordinance (Cap. 151)Hong Kong e-Legislation

The post Guide to Establishing an Non-Profit Organisation in Hong Kong appeared first on Foundation for Shared Impact.

Introduction

Do you want to start your own business in Hong Kong but are unsure of what licenses or permits you need to obtain to run your business legally in Hong Kong? The requirements and the processes to obtain the licenses can seem confusing, but look no further than this handy resource that we would like to introduce to you.

Business Licence Information Service by SUCCESS

SUCCESS (Support and Consultation Centre for Small and Medium Enterprises) by the Trade and Industry Department of the Government of Hong Kong provides a convenient website on which you can find all the basic information you need to identify the licenses you need to obtain.

The interactive website will ask you to provide answers to some short questions about your business operations and list out all the relevant licenses and permits that you should consider.

An Illustration – Opening a Take-out Restaurant in Hong Kong

To demonstrate how you can effectively use the Business Licence Information Service, we’ll make use of an imaginary example of a new take-out restaurant.

1. Select your industry

When you first enter the Business Licence Information Service website, You can select the categories that are the most relevant to your business by either conducting a keyword search or selecting the products and services that your business offers.

For our example of a take-out restaurant, we will select “Accommodation & Food Services” from the Services category.

2. Choose your business type

After selecting your industry, the form will ask you to narrow your selection. If several options seem to be relevant to your business, browse through the different choices to see what results are given to you – as the tool will suggest the licenses and permits you need to obtain per the selection you make. If you think that none of the provided options apply to your business, try choosing the most fitting one instead and/or contact the authority directly to gain further insight.

Once you have selected a business type, the website will ask you further questions about the business operation.

For our example of a take-out restaurant, we selected “Fast Food Shops, Take-Away only” as the business type and below is the question we are asked:

Select ALL boxes that apply to your business. In our example, we ticked the third box only – “Your business entity will operate as a company with limited liability in Hong Kong.”

3. Review the output

After you have gone through all the questions, the tool will return you the list of licenses you need to obtain to legally run your business in Hong Kong along with supplementary information such as the application forms, notes, and more.

Note that the output is summarized into three parts:

• Part A: Compulsory – what is legally required for you to obtain to run your business
• Part B: Additional – what you may need in addition to the licenses if you have not yet obtained the same (e.g. business registration, incorporation documents etc.)
• Part C: Other – what you may need based on situations and circumstances, including specific activities or ways of operation for your business.

More tips

• If this tool does not give you the answers that you were looking for, or should you need further clarification, we strongly recommend you to contact the respective authority directly to seek further advice.
• Make use of the files and links provided by the tool – review the application guides and also make use of the direct contact details of the most relevant party to reach out to if need be.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

Submit

The post Obtaining a Business License in Hong Kong appeared first on Foundation for Shared Impact.

What is a Service Agreement, and When Do I Need One?

Are you engaging a third party (person or an entity) for a project or other defined engagement? In that case, you should consider writing and executing a service agreement.

A service agreement is a contract that outlines the terms and conditions of a service relationship between two parties. It defines the scope of services to be provided, the payment terms, confidentiality obligations, dispute resolution mechanisms, and other important details. This agreement ensures that both parties clearly understand their rights and responsibilities, and helps protect their interests throughout the service engagement. Examples of the scenarios where a service agreement will come most handy include:

• Execute an agreement with your client or partners if you are a small start-up
• Engage a freelancer or an independent contractor (or you could be the freelancer yourself) for a short-to-long-term project to protect your rights and set expectations
• Engage professional service providers, such as consultancy firms

Template of Service Agreement

To make your work easier, we created the below ready-to-use template of service agreement that you can customize to fit your needs and to ensure clear and mutually beneficial service relationships for your organization.

Please download the document to your device to edit it further.

powered by Advanced iFrame

Additional Readings

If you are looking to hire someone as your employee, read the below guide and templates.

Disclaimer

The information provided on this website does not, and is not intended to, constitute legal advice or as a substitute for the particularized advice of your own counsel. All information, content, and materials available on this website are for general informational purposes only, and they may not constitute the most up-to-date legal or other information. This website may contain links to other third-party websites, and such links are only for the convenience of the reader, user or browser. The links to third-party websites or information are not intended as, and should not be interpreted by you as, constituting or implying our endorsement, sponsorship, or recommendation of the third party information, products, or services found there.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

Submit

The post Service Agreement Template appeared first on Foundation for Shared Impact.

Curated by PwC, this Personal Data Privacy Toolkit for NGOs aims at upskilling the operational capability of social impact organizations so that they can comply with the Personal Data (Privacy) Ordinance (Cap. 486) in Hong Kong.

中文版《非政府機構個人資料私隱指南》可從此下載。

Take a look at our other resources curated for social impact organizations here.

The post NGO Personal Data Privacy Toolkit appeared first on Foundation for Shared Impact.

Guide to Contracts and Contractual Agreements

When you enter into a contract with a third party, you are creating mutual obligations enforceable by law. What are the elements of contracts that you should be aware of before entering into a contract? When you are engaging with an agency as part of the contract, what are their duties and rights? Read this post to find out more about:

• Elements of a Contract
• Consideration
• Agency Law in Hong Kong
• Grounds to Challenge a Contract

Elements of a Contract

Guide to consideration

Agency Law in Hong Kong

Grounds to Challenge a Contract

Disclaimer

The information provided on this website should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This guide is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are limited to the laws of Hong Kong as at the date of writing and is intended for general informational purposes only. You are urged to consult your attorney concerning any particular situation and any specific legal question you may have. This website contains links to other third-party websites, and such links are only for the convenience of the reader, user or browser. These links to third-party websites or information are not intended as, and should not be interpreted by you as, constituting or implying our endorsement, sponsorship, or recommendation of the third party information, products, or services found there. The Foundation for Shared Impact
appreciates the pro bono support of Ropes & Gray LLP in reviewing this guide.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

Submit

The post Guide to Contracts appeared first on Foundation for Shared Impact.

Guide on Privacy and the Personal Data (Privacy) Ordinance (PDPO)

Disclaimer

The information provided on this website should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This guide is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are limited to the laws of Hong Kong as at the date of writing and is intended for general informational purposes only. You are urged to consult your attorney concerning any particular situation and any specific legal question you may have. This website contains links to other third-party websites, and such links are only for the convenience of the reader, user or browser. These links to third-party websites or information are not intended as, and should not be interpreted by you as, constituting or implying our endorsement, sponsorship, or recommendation of the third party information, products, or services found there. The Foundation for Shared Impact appreciates the pro bono support of Ropes & Gray LLP in reviewing this guide.

.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

Submit

The post Guide to Privacy and PDPO appeared first on Foundation for Shared Impact.