It is often assumed that charities are exempted from tax so that these institutions (or trusts) can do more with a bigger budget. In reality, this is much less straightforward.
In April 2020, the Inland Revenue Department (IRD) updated its charity tax guide to clarify that even if a charity had been granted tax exemption status under Section 88 of the Inland Revenue Ordinance, this did necessarily not mean that all of its income would be automatically tax-exempted. The guide also sets out the tax obligations of exempted charities, as well as penalties for non-compliance.
With the trend for companies to assume greater corporate social responsibility, some have elected to set up an inhouse charity as a separate entity and apply for tax exemption. At the same time, such charitable operations are coming under increased scrutiny as IRD step up efforts to review the validity of new exemption applications while keeping a close eye on existing tax-exempt charities on issues such as rental income, investments, business profits and other transactions with related parties and directors.
Given all of these, it is essential for companies that are actively engaged in charitable causes or considering such initiatives to arm themselves with a better understanding of the legal principles behind the tax status of charities.
At this webinar, PwC Hong Kong's Philip Hung and Felix Tsang, respectively Director and Senior Manager of Tax Controversy Services, will be sharing their experiences in handling the IRD's reviews of charities. The talk will address the following:
1. Overview of the legislation and common legal principles on tax exemptions of charities;
2. Overview of the updated charity tax guide and implications for charities and donors claiming donation deductions;
3. Common issues considered by the IRD regarding charitable functions set up by corporates.
Please refer to the following on the virtual seminar:
- Details such as the webinar link and participation in the Q&A session will be issued 3 days before the event.
- Instructions on downloading Zoom and joining a meeting can be found here. We suggest that you familiarize yourself with the software in advance of the webinar.
- Please log in 15 minutes (at 1:45pm) before the event begins, through the link that will be sent to your registered email. This will allow time to address any technical issues that may arise.