Tax Incentives to Encourage Companies Doing Well to Donate to Charities

Ms Hazel Poa asked the Deputy Prime Minister and Minister for Finance in view of the difficulties that charities are encountering in raising funds under the current climate, whether the Ministry will enhance tax incentives to encourage companies still doing well to donate.

The Government adopts a multi-pronged approach to encourage charitable giving from individuals and businesses. This complements Government funding and support for our charities and their beneficiaries.

Currently, the Government provides a 250% tax deduction to qualifying donations1 made to Institutions of A Public Character (IPCs). In addition, through the Business and IPC Partnership Scheme (BIPS), businesses can enjoy 250% tax deduction on wages and related expenses for corporate volunteering. Beyond tax incentives, the Government also supports charitable giving through grants that match donations raised.

The current 250% tax deduction on qualifying donations to IPCs is relatively high, compared to other jurisdictions such as Australia, Hong Kong, and United States. Companies that are doing well, and choose to give or volunteer generously, will benefit from lower taxes.

However, we must also pay attention to our fiscal position which has been weakened by the impact of COVID-19 on our economy. Hence, we have to strike a balance between granting tax benefits to encourage charitable giving, and ensuring sufficient tax revenue for our recovery and spending needs.

We will continue to review how best to encourage sustained giving through tax and non-tax measures.