On 26 February 2025, the Financial Secretary of the Hong Kong Special Administrative Region, the Hon. Paul Chan Mo-po, delivered the 2025-26 Budget Speech.
Mr. Chan expects that Hong Kong would have a deficit of HK$87.2 billion for 2024-25 and a deficit of HK$67 billion for 2025-26, but the estimated fiscal reserves would be HK$579.1 billion by end-March 2030. Hong Kong economy has grown for two consecutive years. The employment market has been stable, while inflation remains moderate. The Government’s efforts to attract talent and enterprises have been remarkably successful. The successive staging of large-scale international mega events has been coupled with a notable increase in visitor arrivals. Nevertheless, Hong Kong has also experienced a lot of challenges. The international geopolitical landscape has caused disruptions to trade, supply chain, cash flow and sentiment in the investment market. Local asset prices are contained under a relatively high-interest rate environment, whereas the retail and catering markets are still troubled by changes in the consumption pattern of visitors and Hong Kong residents.
The budget is therefore themed “Accelerating Development through Reform and Innovation”, with focus on economic development, in particular boosting new economic driving forces while enhancing the competitive edge of traditional industries at an accelerated pace. Mr. Chan mentioned that there would be no considerable increase in tax rates or introducing new taxes in order to maintain the competitiveness of Hong Kong’s simple and low tax regime.
2025-26 Budget Highlights
We summarize the 2025-26 budget’s key highlights relating to salaries tax, profits tax, measures to smoothen livelihoods, support enterprises, developing innovation and technology, and upgrading industries, as follows:
Smoothen livelihoods
- Salaries Tax and tax under personal assessment for 2024-25 will be reduced by 100%, subject to a ceiling of $1,500 (2023-24: $3,000). The reduction will be reflected in the final tax payable for the year of assessment 2024-25
- Waive rates for domestic properties for 2025-26 in the first quarter, subject to a ceiling of $500 (2024-25: $1,000 per quarter for first quarter)
Support Enterprises
- Profits Tax for 2024-25 will be reduced by 100%, subject to a ceiling of $1,500 (2023-24: $3,000). The reduction will be reflected in the final tax payable for the year of assessment 2024-25
- Waiver of rates for non-domestic properties for the first quarter of 2025-26, subject to a ceiling of $500 (2024-25: $1,000 per first quarter).
Upgrading Industries
Innovation and Technology
- Pilot Manufacturing and Production Line Upgrade Support Scheme: $100 million earmarked to provide funding of up to $250,000 on a 1 (government) to 2 (company) matching basis to enterprises
- HKEX will establish a dedicated “technology enterprise to help companies prepare for listing applications
- Review tax-deduction arrangements for purchase of intellectual property usage rights and related transactions
- Low-altitude Economy Regulatory Sandbox: announcing results soon; consider dedicated legislation for various types of Advanced Air Mobility
Finance
- Improve vetting process for listing, optimize thresholds for listing, review market structure
- Formulate proposals on enhancing preferential tax regimes for funds and single family offices
- Propose measures to promote gold market development this year
- Extend pilot grant scheme on insurance-linked securities for 3 years
- Implement linkage of faster payment systems between the Mainland and Hong Kong in the middle of the year earliest
- Launch public consultation on specific proposals of MPF “Full Portability” this year
Trade
- Multinational Supply Chain Management Centre: continue to support Mainland enterprise to go global and provide credit insurance, one-stop professional consulting services, etc.
Shipping
- Propose provision of half-rate tax concessions to eligible commodity traders. Target to introduce a bill into the Legislative Council next year
- Allocate over $210 million to install the port community system, enhancing the flow and sharing of data among stakeholders in the maritime, port and logistics industries
Aviation
- Promote Hong Kong’s development into Asia’s first aircraft dismantling, parts recycling, processing and trading centre
Green Development
- InnoCentre in Kowloon Tong to become GreenTech Hub, housing over 200 green technology companies
- Provide tax exemptions for green methanol used for bunkering
- Extend the Pilot Green and Sustainable Finance Capacity Building Support Scheme to 2028
Small and Medium Enterprises
- Inject $1.5 billion into the BUD Fund and the Export Marketing and Trade and Industrial Organisation Support Fund, and streamline application arrangements
- SME Financing Guarantee Scheme: principal moratorium application period to last until November 2025
- Funds dedicated for SME financing by participating banks of the Taskforce on SME Lending exceed $390 billion
Stamp duty
- Domestic and non-domestic property transactions: increase the maximum value of properties chargeable to a stamp duty at the rate of $100 from $3 million (2023-24) to $4 million, with immediate effect
Amount or value of the consideration |
Rates |
|---|---|
|
Up to HK$4,000,000 |
HK$100 |
|
HK$4,000,001 to HK$4,323,780 |
HK$100 + 20% of the excess over HK$4,000,000 |
|
HK$4,323,781 to HK$4,500,000 |
1.50% |
|
HK$4,500,001 and above |
Same as existing arrangements |
CW welcomes the Government’s 2025-26 Budget, which strikes a prudent balance between economic stimulation and fiscal sustainability. The emphasis on innovation, financial sector enhancement, and industry transformation reflects a commitment to reinforcing Hong Kong’s position as an international business hub. The targeted tax reliefs and enterprise support measures will help businesses navigate current economic challenges while fostering long-term growth. As a professional accounting firm, CW looks forward to helping businesses and individuals seize the opportunities presented in this Budget, ensuring they remain competitive and well-positioned for the future.
