Where a charity carries on a trade or business, the profits derived from such trade or business are only exempt from profits tax if all of the following conditions under the proviso to section 88 of the IRO are satisfied:
(1) the profits are applied solely for charitable purposes;
(2) the profits are not expended substantially outside Hong Kong; and
(3) either –
(a) the trade or business is exercised in the course of the actual carrying out of the expressed objects of the charity, or
(b) the work in connection with the trade or business is mainly carried on by persons for whose benefit the charity is established.
Therefore, if a charity carries on a trade or business, the profits derived from that trade or business (such as property letting and provision of hotel or catering services), including interest income and investment profits attributable to the fund of that trade or business, are exempt from profits tax only if all of the conditions under the proviso to section 88 of the IRO are satisfied. Otherwise, the profits of that trade or business which are arising in or derived from Hong Kong will be chargeable to profits tax under section 14(1) of the IRO.
Regarding the condition that a trade or business of a charity is exercised in the course of the actual carrying out of the expressed objects of the charity, the trade or business must be directly related to the achievement of the charity’s expressed objects. Fund-raising activities that are not directly related to the achievement of the charity’s expressed objects (such as letting properties to tenants not belonging to specific needy groups) cannot satisfy the proviso. A clear distinction should be made between a charity’s objects (i.e. the charitable purposes that a charity is established to achieve) and its powers which enable the objects to be achieved (such as the power to lease out its properties). The objects of a charity and its powers to be exercised in effecting the objects are different things.
獲豁免繳税的慈善團體可能負上的利得税責任
如慈善團體經營任何行業或業務，從該行業或業務所得的利潤必須符合下列所有《税務條例》第 88條訂明的條件，才可獲豁免繳付利得税：
(1) 所得利潤是純粹作慈善用途；
(2) 所得利潤其中大部分不是在香港以外地方使用；及
(3) (a) 該行業或業務是在貫徹慈善團體明文規定的宗旨而經營的；或
(b) 與該行業或業務有關的工作主要是由某些人進行，而該慈善團體正是為該等人的利益而設立的。
因此，如慈善團體經營任何行業或業務，得自該行業或業務（例如出租物業及提供酒店或餐飲服務）的利潤，包括可歸因於有關行業或業務的資金所得的利息收入或投資利潤，必須符合《税務條例》第88條訂明的全部條件，才可獲豁免繳付利得税。否則，該行業或業務於香港產生或得自香港的利潤須根據《税務條例》第14(1)條被徵收利得税。
關於慈善團體經營的行業或業務是否實際貫徹其明文規定的宗旨時，該行業或業務必須是直接與實現明文規定的宗旨有關的。不是直接與實現慈善團體明文規定的宗旨相關的籌款活動（如出租物業予不屬於特定有需要群組的租客）是不能夠符合要求。慈善團體的宗旨（即成立慈善團體旨在實現的慈善用途）及使該團體的宗旨得以實現的權力（如出租物業的權力）應清楚分辨。慈善團體的宗旨及為達成該等宗旨而可行使的權力是不同的。
