Profits Tax - Donation
charitable donations are allowable under Section 16D of Inland
donation” means a donation of money to Hong Kong SAR Government or
an approved charitable organization which is exempt from tax under
Section 88 of Inland Revenue Ordinance. A list of such organizations
is published on the Revenue's homepage: [Publications] >
[list of exempted charities].
No deduction is due for
charitable donations totaled less than HK$100.
The maximum deduction is
35% of the assessable profits before deducting loss brought forward.
allowance will be given to those donations which have been already
allowed under Salaries Tax or Personal Assessment or allowed as
qualifying expenditure for Scientific Research or Technical
A donation means a
donation of money. If a "donation" is to buy something at
lower than its market price, then it will not attract tax
relief. See the Hong Kong tax case re Standford Yung Tao Yung.
A donation not
meeting the conditions for charitable donation or a donation
exceeding the 35% limit can still qualify
deduction if it is a revenue expense satisfying Section 16(1) of IRO --- that means it is
incurred in the production of assessable profits and it is not
capital nature. Of course, the burden of proof for such conditions
is on the taxpayer. In general, a donation for charitable purpose
will not be accepted by IRD as "in the production of chargeable
profits"; therefore it is likely that the Section 16(1) general test