On 25 February 2026, the Financial Secretary of the Hong Kong Special Administrative Region, the Hon. Paul Chan Mo-po, delivered the 2026-27 Budget Speech.
Mr. Chan expects that Hong Kong would have a surplus of HK$2.9 billion for 2025-26 and a surplus of HK$22.1 billion for 2026-27, but the estimated fiscal reserves would be HK$737.7 billion by end-March 2031. Over the past year, as a result of the booming economy and capital market, the tax revenue has increased. Coupled with the reinforced fiscal consolidation programme gradually bearing fruit, the public finances have improved sooner than expected. The Operating Account has returned to a surplus this financial year. After taking into account the proceeds from bond issuance, the Consolidated Account has also returned to balance ahead of schedule. All these have enabled the government to suitably reinforce support for the people and small and medium enterprises (SMEs) within their means.
The budget is therefore themed “Driving High-quality, Inclusive Growth with Innovation and Finance”.
2026-27 Budget Highlights
We summarize the 2026-27 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
- Adjustments to Tax Allowance And Deduction Ceilings.
- Increase the basic child allowance and the additional child allowance for each child.
- Salaries Tax and tax under personal assessment for 2025-26 will be reduced by 100%, subject to a ceiling of HK$3,000 (2024-25: HK$1,500). The reduction will be reflected in the final tax payable for the year of assessment 2025-26.
- Waive rates for domestic properties for 2026-27 in the first 2 quarters, subject to a ceiling of HK$500 (2025-26: HK$500 per quarter for first quarter).
Support Enterprises
- Profits Tax for 2025-26 will be reduced by 100%, subject to a ceiling of HK$3,000 (2024-25: HK$1,500). The reduction will be reflected in the final tax payable for the year of assessment 2025-26.
- Waiver of rates for non-domestic properties for the first 2 quarters of 2026-27, subject to a ceiling of HK$500 (2025-26: HK$500 per first quarter).
Driving Growth with Innovation and Technology (I&T)
Enhancing AI literacy:
- HK$50 million to help public organisations, tech enterprises and tertiary institutions set up AI application courses, seminars and competitions.
- Employees Retraining Board to become Upskill Hong Kong, providing skill-based training, including AI application.
- Empowering public services: HK$100 million to accelerate Government digital transformation with leading technologies.
- Data utilisation: supporting more data-science analyses; new online interactive data service platform to be launched in March.
Supporting Emerging Industries
- Microelectronics: Hong Kong Investment Corporation (HKIC) and enterprises to establish Hong Kong RISC-V Alliance, forging collaboration among industries, academia and the investment sector.
- HK$10 billion I&T Industry-Oriented Fund to begin operation this year.
- Review and enhance tax arrangements for R&D expenditures.
New Industrialisation
- New Industrialisation Elite Enterprises Nurturing Scheme to be launched this year, supporting high-growth enterprises.
- Around HK$220 million to establish the first national manufacturing innovation centre outside the Mainland.
Financial Empowerment
Promoting Finance+
- Offshore RMB market: reduce transaction costs for RMB and other currency conversions; attract more RMB-denominated bond issuances in Hong Kong; explore formation of offshore RMB yield curve.
- Mutual Market Access: expedite launch of Chinese Government Bond futures in Hong Kong, inclusion of real estate investment trusts (REITs) in mutual access, and inclusion of RMB trading counter under Southbound Stock Connect.
- Custodian platform: study the establishment of one-stop multi-asset class post-trade securities infrastructure, covering Mainland and Hong Kong equity and debt securities.
- Asset and wealth management: legislate this year to enhance family offices and fund tax regime, and enable REITs privatisation. Amend the law next year to provide stamp duty waiver for transferring non-residential properties into REITs seeking to list.
- Corporate treasury centres (CTCs): relax criteria for stamp duty relief for intra-group transfer of assets. Applicable to instruments signed from today (25 Feb 2026). Announce in the year enhancement measures for CTCs, including additional tax incentives.
- Gold trading: explore tax concessions for eligible institutions conducting gold trading and settlement in Hong Kong.
Diversified Development
Trade Centre
- Preferential policy packages: including preferential arrangements on land grants, financial subsidies and tax incentives. Preferential tax rates at half rate or 5%. Introduce amendment to tax law this year.
- Advisory Committee on Tax Policy: gather views from commercial, industrial and professional sectors to support economic development with tax policies.
- Cross-sectoral professional services platform to support enterprises in going global.
Intellectual Property Trading
- Tax deduction arrangements for capital expenditure in purchasing intellectual property: introduce legislation this year.
Aviation, Shipping, Logistics
- Introduce legislation this year to enhance tax-concession measures for maritime services industry, provide half-rate tax concession to eligible commodities traders, revamp existing ship registration arrangements, extend current arrangements under Air Transhipment Cargo Exemption Scheme, etc.
- Provide port dues concessions for green vessels and offer incentives for green vessels registered in Hong Kong; $34 million expenditure.
Caring for the People
Supporting Local Enterprises
- BUD Fund: injection of $200 million.
- Raise funding ceiling for each Easy BUD application to $150,000.
Increasing Revenue
- Implement BEPS 2.0 by OECD: expected to bring in additional tax revenue of HK$15 billion annually for the Government, starting from 2027-28.
- Adjust stamp duty on residential properties valued over HK$100 million from 4.25% to 6.5%, with retrospective effect from 26 Feb 2026.
|
Amount or value of the consideration (whichever is higher)
|
Rates
|
|---|---|
|
Up to HK$10,000,000 |
Same as existing arrangements |
|
HK$100,000,001 to HK$109,574,470 |
HK$4,250,000 + 30% of the excess over HK$100,000,000 |
|
HK$109,574,471 and above |
6.5% |
CW welcome the Government’s 2026–27 Budget, which marks a significant step toward enhanced fiscal resilience and inclusive growth. The earlier-than-expected return to surplus demonstrates prudent financial management and strengthens confidence in Hong Kong’s economic recovery. The meaningful relief measures introduced for individuals and SMEs — including enhanced child allowances, tax reductions, and rate waivers — will provide timely support to households and businesses. At the same time, substantial investments in innovation, technology, and financial infrastructure reflect a clear commitment to strengthening Hong Kong’s long-term competitiveness. For the business community, the Budget strikes an appropriate balance between short-term relief and strategic positioning. By supporting emerging industries while reinforcing Hong Kong’s role as an international financial hub, the measures lay a solid foundation for sustainable economic development. Overall, the Budget demonstrates a prudent yet forward-looking approach, balancing fiscal discipline with progressive investment to promote sustainable growth and enterprise advancement.