What to do if the application for Charity Organization 88 is rejected? Common questions from the tax bureau explained one by one (2026 practical sharing)

Many social enterprises and religious organizations, when they come to us, often say, "We submitted our S88 application ourselves and waited for 9 months, but the tax bureau said 'not charitable enough.'"

In fact, in recent years, the tax bureau not only reviews constitutional provisions but also closely examines "actual control" and "fund flow." If you think that simply filling out the IR form is sufficient, there’s a high chance the back-and-forth for supplementary documents could exceed a year.

This article will not repeat the application process but will focus on the most common questions asked by the tax bureau, common mistakes made during self-applications, and how to shorten the waiting time.

Five questions the tax bureau loves to ask (those who have applied will know)

First Question: Will your income go into private hands?

Even if the constitution states "no distribution of dividends," if directors' salaries are excessively high or service fees are paid to related companies of the founders, the tax bureau will question whether it is genuinely for charitable purposes. It is recommended that salaries must be in line with market levels and be supported by board records.

Second Question: Why can the constitution be amended to change the purpose?

The tax bureau is very concerned that a charity may eventually convert to a non-charitable purpose. The standard practice is to add a clause: "Amendments to the purpose must have prior approval from the Commissioner of the Inland Revenue and can only be changed to charitable nature."

Third Question: Is your activity plan specific enough?

Simply writing "promoting education" or "serving disadvantaged communities" is too vague. The tax bureau wants to see: "Holding 4 free community financial workshops in the coming year, expecting to serve 200 seniors, with a budget of HKD 80,000." The clearer the numbers and locations, the better.

Fourth Question: Where do the assets go upon dissolution?

This is one of the most common reasons for rejection. Simply stating "donate to legal organizations" is not sufficient; it must specify "donate to charities with similar nature and recognized under Section 88 of the Inland Revenue Ordinance."

Fifth Question: Why are you applying before starting activities?

The tax bureau may doubt whether the organization is genuinely operational. If you are a newly established group, it is recommended to hold one or two small free events (e.g., lectures, community services), and then apply with event records and photos to significantly increase the success rate.

Should you apply for the S88 license as a "Company Limited by Guarantee" or a "Trust"?

Most people choose to apply as a Company Limited by Guarantee because it makes it easier to open a bank account and apply for grants later. Although applying as a Trust might be quicker at times, it can lead to more operational troubles:

Banks are very cautious about opening accounts for trusts, and many will refuse. Applying for government grants (e.g., from social welfare or foundations) often requires the applicant to be a "legal entity," which trusts may not qualify as.

Conclusion: Unless you are a small religious group or family trust, it is strongly recommended to choose a Company Limited by Guarantee.

Is using an agent always faster? The truth is: it's faster in "responding to the tax bureau's questions."

The tax bureau will almost certainly issue the first inquiry letter (about 3 to 4 months after submission). The key is not the day you submit the application, but whether you know how to answer the tax bureau’s questions.

Timeline for self-application:

After receiving the letter, take time to research, gather information, and modify the constitution, each question may take 2 to 3 weeks. With back-and-forth requests for supplementary documents 2 to 3 times, it could drag on another 6 to 9 months. The total time is typically about 12 to 18 months, which is very common.

Difference with agents:

When we draft the constitution, we already include "clauses that the tax bureau expects to see." We know how to respond the day we receive the inquiry letter, usually requiring only 1 to 2 rounds of supplementary documents. The total time is about 8 to 12 months, with preparation done in 2 to 3 months faster.

Real case: Self-application took 14 months without success, but approved in 5 months after we took over.

A local youth organization submitted their S88 application by themselves and waited 14 months, with 4 rounds of supplementary documents, and the tax bureau eventually indicated that "the asset disposal clause was not compliant."

They originally wrote: "Remaining assets upon dissolution will be donated to other legal organizations."

Correction method: Changed to "Remaining assets upon dissolution must be donated to charities of similar nature that are recognized under Section 88 of the Inland Revenue Ordinance and must not be returned to any members or shareholders." After we assisted in modifying the constitution and resubmitted, the tax bureau issued approval within 3 months, completing the process in 5 months.

Self-application vs. agency services (real comparison)

Self-application: Preparation time is 1 to 3 months (self-researching provisions). The quality of the constitution often misses key clauses, and responding to tax bureau questions usually takes 2 to 3 weeks each time. The average total time is 12 to 18 months, with a medium to high risk of rejection.

Agency services: Preparation time is 1 to 2 weeks, with the constitution already meeting tax bureau requirements, and responding to tax bureau questions takes only 2 to 3 days. The average total time is 8 to 12 months, with a low risk of rejection.

Conclusion: If you encounter the following situations, don’t wait any longer:

If you have been self-applying for over six months without any updates, received an inquiry letter from the tax bureau but don’t know how to respond, haven't started the application but are unsure how to write the constitution correctly, or have been previously rejected and want to resubmit, feel free to contact us.

AMP Corporate Services Limited provides free initial document reviews, without requiring payment upfront for agency services. We analyze with you: how likely your objectives are from the tax bureau's perspective, which clauses are most likely to be questioned, and whether it is more cost-effective to continue doing it yourself or to switch to an agency.

We specialize in setting up Companies Limited by Guarantee, drafting constitutions (including key S88 clauses), processing S88 licenses, as well as providing ongoing accounting and auditing support.

Frequently Asked Questions (FAQ)

Q: How long does it typically take to self-apply for S88?

A: Generally 8 to 18 months, depending on the speed of responding to tax bureau inquiries and whether the documents are complete.

Q: Will a failed application affect reapplication?

A: No, as long as you correct the reasons for rejection, you can resubmit. We have many clients who have succeeded in their second application.

Q: What is the typical fee for agency services?

A: It depends on the complexity of the organization; feel free to contact us for a quote, or you can choose individual services (e.g., assistance with drafting the constitution only).