Charity License Application Guidelines 2026: S88 Tax Exemption Complete Guide

If you want to set up a charitable organization (NGO) or social enterprise, the first step is not to raise funds or organize activities, but to successfully apply for the tax exemption qualification under Section 88 (S88) of the Inland Revenue Ordinance, which is the "charitable organization license" or "88 license" that everyone talks about all the time.

But many people don’t know that in recent years, the tax bureau’s examination and approval has become more and more strict. The application can be more than one year old at any time, and you have to go back and forth to resubmit documents. If the articles of association are not written accurately enough, it will be rejected in minutes.

This article will explain in detail the application requirements, required documents, procedures, common reasons for rejection, and how hiring a professional agent can help you save a lot of time.

What is a "charity license" (S88)?

Simply put, according to Section 88 of the Inland Revenue Ordinance, any organization or trust established solely for charitable purposes can be recognized by the Commissioner of Inland Revenue as a charitable organization exempt from paying tax.

The benefits of approval include: income and profits are tax-free, donors can apply for tax deductions based on receipts, the organization's credibility is enhanced, and it is easier to apply for government or foundation funding.

S88 Four Approval Conditions (These are the four points that the tax authorities value most)

First, the purpose must be purely charitable, and must be for purposes such as poverty alleviation, education, religious promotion, or other purposes that benefit Hong Kong society, such as environmental protection, medical care, and human rights.

Second, income must be used solely for charity and cannot be distributed as dividends or profits to members or shareholders.

Third, a profit-sharing clause is required; the articles of association must explicitly prohibit the payment of any profits to members.

Fourth, the asset disposal clause stipulates that any remaining assets upon dissolution must be donated to other charitable organizations and cannot be returned to the members.

Most people fail in the third and fourth points. If they miss a sentence in the articles of association, they will be turned back by the tax bureau at any time.

What documents are needed to apply for an 88 license?

The most basic list of documents includes: articles of association, activity plan for the next 12 months, budget income and expenditure statement, past activity records (if it has been in operation for a period of time), list and background of directors or trustees, and the Inland Revenue Department IR application form.

Application process (from scratch to approval)

The first step is to establish a guarantee company, a structure adopted by most charitable organizations.

The second step is to draft the bylaws, which must include the terms required by S88.

The third step is to submit the application to the tax bureau.

The fourth step is for the tax authorities to send an email with questions or request additional documents.

The fifth step is to answer the tax bureau's questions, and this step is the most crucial.

The sixth step is to officially obtain S88 recognition.

It typically takes about 8 to 18 months, depending on the response speed and the completeness of the documents.

The most common reasons for rejection (must read to avoid pitfalls)

One reason is that the purpose is not charitable enough, for example, it includes political motives or commercial returns.

The second reason is that the articles of association do not prohibit profit sharing, nor do they state that members cannot receive money.

The third reason is that the activity plan is too vague, written in a general way, and without specific actions.

Reason 4: The asset disposal terms are not qualified, and the assets shall be returned to the members upon dissolution.

Applying yourself vs. using an agency – which should you choose?

The cost of applying by yourself is only the government fee, but it often takes more than a year, and it is easy to miss terms and have to go back and forth to fill in the documents. It is suitable for people who are familiar with company laws and tax regulations.

The agency service requires government fees plus service fees, but it can shorten the preparation time, handle everything in one go, reduce the need for supplementary documents, and is suitable for most NGOs, social enterprises or religious groups.

Startup Accounting & Business offers free initial consultations to assess your success rate before deciding whether you need our services.

Summary

Although applying for a charity license (S88) is not an impossible task, it must not be taken lightly. From the articles of incorporation, the four major conditions, to responding to questions from the tax bureau, every step affects the final result.

If you are in the following situation: you are not sure whether your purpose is eligible, you don’t want to spend several months to fill in the documents, and you want to be approved to carry out charity work as soon as possible, please contact AMP Account Service Limited.

We specialize in the establishment of guarantee companies, drafting of articles of association (including key S88 clauses), agency application for S88 licenses, and subsequent accounting and auditing support.