Hong Kong Budget 2025-26: the key takeaways for business

Financial Secretary Paul Chan presented the Hong Kong 2025-26 Budget on 26 February, setting out key economic measures that are designed to reinforce the Special Administrative Region’s position as an international financial and trade hub.

Hong Kong’s economy grew 2.5% in 2024, while the number of visitors increased by about 30% to around 45 million. Total exports of services grew by 4.8% for the year.

Chan said that the Hong Kong economy faces external challenges, including ongoing geopolitical tensions and trade protectionism. But there were also several positive factors and the government predicted that Hong Kong’s economy would continue to grow moderately this year, with an expected increase of 2% to 3% in real terms.

The budget sets out various measures to sharpen Hong Kong’s competitive edges, including fiscal consolidation efforts, tax incentives, talent attraction policies, a focus on AI and Greater Bay Area (GBA) integration initiatives. Below are the highlights relevant to private clients and corporate services.

1. Taxation and Business Incentives

• Salaries and Profits Tax: A one-off 100% tax rebate for profits tax, salaries tax and personal assessment for 2024/25, capped at HKD1,500.
• Preferential Tax Measures:
  • Intellectual property (IP) – to accelerate the development of IP-intensive industries and promote the development of IP trading in Hong Kong, the government will review the relevant tax deduction arrangements for various expenditures, including the lump sum licensing fees for acquiring the rights to use IP, and related expenses incurred on purchase of IP or the rights to use IP from associates.
  • Enhancing tax concessions for funds and family offices (see 5. Asset and Wealth Management below).
  • Maritime Services – Proposing to introduce tax deduction on ship acquisition cost for ship lessors under an operating lease, and a half-rate tax concession to eligible commodity traders.
  • Providing tax exemption for green methanol used for bunkering.
• Stamp Duty: Raising the maximum value of residential and non-residential properties chargeable to a stamp duty of HKD100 from HKD3 million to HKD4 million with immediate effect.
• Base Erosion and Profit Shifting (BEPS 2.0): To apply the global minimum tax rate of 15% on large multinational enterprise groups with an annual consolidated group revenue of at least €750 million and impose the Hong Kong minimum top-up tax starting from fiscal years beginning on or after 1 January 2025.

2. Supporting Local Enterprises

• The government extended the principal moratorium application period for SME Financing Guarantee Scheme to last until November 2025.
• HKD100 million will be embarked to provide funding of up to HKD250,000 per enterprise operating production lines in Hong Kong to support formulation of smart production strategies and introduction of advanced technologies into existing production lines.
• The government will inject HKD1.5 billion in total into the Dedicated Fund on Branding, Upgrading and Domestic Sales and the Export Marketing and Trade and Industrial Organisation Support Fund, and streamline application arrangement.
• The funds dedicated for SME financing by participating banks in the Taskforce on SME Lending have recently been increased to over HKD390 billion.
• The Hong Kong Trade and Development Council (HKTDC) will launch the E-Commerce Express to provide Hong Kong enterprises with consultation services.

3. Business Expansion and Greater Bay Area (GBA) Integration

• Office for Attracting Strategic Enterprises (OASES) – OASES will announce a new batch of more than ten strategic enterprises next month. Together with those previously announced, they will invest a total of about HKD50 billion in Hong Kong and create more than 20 000 jobs over the next few years.
• Guangdong-Hong Kong-Macao Greater Bay Area (GBA) Financial Collaboration:
  • Expansion of Cross-boundary Wealth Management Connect Scheme in the GBA.
  • Expand the coverage under the Memorandum of Understanding on Cross-Boundary Credit Referencing Pilots last year between Shenzhen and Hong Kong to further facilitate cross-boundary financing for enterprises.
  • To continue to support the Qianhai Shenzhen-Hong Kong Modern Service Industry Co-operation Zone in trying out new policies on a pilot basis.
• Northern Metropolis (NM) Development: the government will continue to accord priority in providing resources to the NM initiative, which aims to provide homes for around 2.5 million people and create a new business district, including:
  • Large-scale land disposals are planned to accelerate commercial and industrial growth. The government is to invite expressions of interest for three pilot areas under “large-scale land disposal”, with the target of commencing tendering progressively from the second half of this year.
  • The Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone (Hetao Co-operation Zone), together with San Tin Technopole, will provide large tracts of Information and Technology (I&T) land to leverage complementary advantages with the Shenzhen Park of the Hetao Co-operation Zone.
  • Dedicated land is reserved for financial services, logistics and innovation sectors.
• International Trade and Expansion:
  • Expanding the tax treaty network by negotiating Comprehensive Avoidance of Double Taxation Agreements with 17 countries, and exploring the signing of investment agreements with Saudi Arabia, Bangladesh, Egypt and Peru.
  • To attract more inward investment and enterprises from the Global South markets to Hong Kong, the government is discussing the establishment of Economic and Trade Offices in Malaysia and Saudi Arabia.
  • To utilise Hong Kong’s role as a functional platform for the Belt and Road (B&R) Initiative, the government will continue to further cultivate the ASEAN and Middle East markets, and explore opportunities in Central Asia, South Asia and North Africa.

4. Talent Attraction and Business Relocation

• Talent Admission Schemes – the government is to invite top and leading talents to come to Hong Kong for development under the Quality Migrant Admission Scheme and also plans to enhance both the Admission Scheme for Mainland Talents and Professionals and the General Employment Policy by allowing young non-degree talents with professional and technical qualifications and experience to come to Hong Kong to join skilled trades facing manpower shortage.
• Education and Workforce Development:
  • The government to launch a new round of Research Matching Grant Scheme totalling HKD1.5 billion to attract more organisations to support research endeavours of institutions.
  • The government has just raised the upper age limit for participants of the Youth Employment and Training Programme to 29 and introduced workplace attachment opportunities in the GBA to help young people enhance their employability.

5. Wealth Management and Investment Migration

• New Capital Investment Entrant Scheme (CIES): Relaunched in 2024, the New CIES enables qualified individuals to relocate to Hong Kong by making a minimum capital investment of HKD30 million in permissible financial assets. Applicants that meet the portfolio maintenance requirements and maintain continuous ordinary residence in Hong Kong for a period of seven years, are entitled to apply for Hong Kong permanent residence with their dependants. The government said more than 880 applications have been received, with an expected HKD26 billion in investments. It is to introduce enhancements to provide greater flexibility and attract more high-net-worth individuals (HNWIs).
• Asset and Wealth Management: InvestHK has assisted over 160 family offices in setting up operations or expanding their businesses in Hong Kong. The government is to formulate proposals this year on the preferential tax regimes for funds, single family offices and carried interest, including:
  • Expanding the scope of ‘fund’ under the tax exemption regime.
  • Increasing the types of qualifying transactions eligible for tax concessions for funds and single family offices.
  • Enhancing the tax concession arrangement on the distribution of carried interest by private equity funds.
• Offshore RMB Business Hub: Hong Kong has become the global hub for renminbi (RMB) trade settlement, financing and asset management, making a wide range of renminbi products and services available to meet the needs of businesses, financial institutions and investors. The HK government will continue to enhance offshore RMB liquidity, improve the relevant infrastructure, and provide more investment products and risk-management tools. It is conducting technical preparations to implement the inclusion of RMB trading counter under Southbound trading of Stock Connect, and he HKMA is to launch a RMB100 billion Trade Financing Liquidity Facility to support banks in providing RMB trade finance services to their corporate customers
• Mutual market access: The government will enhance the mutual market access mechanism with the Mainland, including the issuance of offshore Mainland government bond futures in Hong Kong, and implementing block trading of stocks and inclusion of real estate investment trusts under the mutual access as soon as possible.
• Mandatory Provident Fund (MPF) ‘Full Portability’: The MPF Schemes Authority will consult on specific proposals for MPF ‘Full Portability’ this year to enable MPF account holders to transfer funds freely across schemes after full implementation of the eMPF Platform.

6. Infrastructure and Sustainability

• Bond Issuance: To accommodate an increase in capital works expenditure, the government expects that a total of about HKD150 billion to HKD195 billion worth of bonds will be issued under the Government Sustainable Bond Programme and the Infrastructure Bond Programme every year from 2025-26 to 2029-30.
• Green Economy and ESG Development:
  • Government will launch a HKD300 million subsidy scheme in the middle of the year to provide impetus for installation of 3,000 fast chargers across Hong Kong by 2030 to be used by 160,000 additional electric vehicles.
  • Earmarked HKD470 million under the New Energy Transport Fund to subsidise franchised bus operators in purchasing 600 electric buses and HKD135 million to subsidise the purchasing 3,000 electric taxis.
• Artificial Intelligence and Innovation:
  • To spearhead and support Hong Kong’s innovative R&D as well as industrial application of AI, the government has set aside HKD1 billion for the establishment of the Hong Kong AI Research and Development Institute, focusing on facilitating upstream R&D, midstream and downstream transformation of R&D outcomes and expanding application scenarios.
  • To further assist specialist technology and biotechnology companies, especially those listed in the Mainland, in raising funds and expanding business, the HKEX is actively taking forward the establishment of a dedicated ‘technology enterprises channel’ (TECH) to facilitate the relevant companies in preparing for listing applications. The Securities and Futures Commission (SFC) will also support to enable a smoother application process.
  • The government is to promulgate a second policy statement on the development of virtual assets to explore how to leverage the advantages of traditional financial services and innovative technologies in the area of virtual assets, enhance security and flexibility of real economy activities, and encourage local and international companies to explore the innovation and application of virtual asset technologies. It will also consult on the licensing regimes of virtual asset over-the-counter trading services and custodian services this year, and will expedite the vetting of licence applications when LegCo approves the current Bill to establish a regulatory regime for issuers of fiat-referenced stablecoins.

Among the priorities covered by the budget, those on innovation, talents and financial markets should attract the attention of investors. Hong Kong’s deepening economic integration with the GBA also provides new opportunities for businesses to expand.

In addition, the initiatives to expand the linkage with other overseas financial markets including the Middle East and new markets such as virtual assets will broaden investor choices and solidify Hong Kong’s status as an international financial centre

With Hong Kong reinforcing its role as a financial and trade powerhouse, businesses and individuals looking to leverage these opportunities will benefit from strategic tax planning, investment structuring, and corporate expansion support.