On 25 February 2026, the Hong Kong Budget 2026-27 was delivered by Financial Secretary, Mr Paul Chan. This year’s Budget is themed around “Driving high-quality, inclusive growth with innovation and finance.”
Hong Kong is aligning closely with the Mainland of China’s 15th Five-Year Plan and deepening participation in the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). If you’re setting up or expanding from Hong Kong, this is a signal that policy and positioning will continue to support Hong Kong as a place for broader regional expansion.
For the near term, the government expects the economy to grow by around 2.5% to 3.5% this year, reflecting both global conditions and Hong Kong’s own market fundamentals. From 2027 to 2030, growth is projected to average about 3% a year in real terms, with an underlying inflation rate of roughly 2% per annum.
Key business and investor highlights for 2026-27
- Reduced profits tax for Year of Assessment 2025/26
- Increased tax allowances for individuals
- Preferential policy packages
- Adjustments to the Dedicated Fund on Branding, Upgrading and Domestic Sales
- Shorter approval process for development projects in the Northern Metropolis
- Internationalisation of the Renminbi
- First national manufacturing innovation centre near the Mainland of China
- New Committee on AI+ and Industry Development Strategy
- AI application courses for upskilling
Taxation and financial relief
Tax policy has been acknowledged for its importance in keeping Hong Kong competitive. To ensure it continues to support economic development, an Advisory Committee on Tax Policy will be established and chaired by Mr Paul Chan to gather views from the commercial, industrial and professional sectors.
Below are other key Budget measures relevant for taxation and financial relief:
Reduced profits tax for Year of Assessment 2025/26
For the Year of Assessment (YA) 2025/26, companies can anticipate a 100% reduction in profits tax, capped at HK$3,000, with the relief applied by reducing the final tax payable for that year. The government estimates that this will support around 171,000 businesses.
For individuals, there is a matching measure. The Budget proposes a 100% reduction in salaries tax and tax under personal assessment for YA 2025/26, also capped at HK$3,000. Again, the reduction will be reflected in the final tax payable for that year.
In the previous Budget, reductions for both the profits tax and salaries tax were capped at HK$1,500.
Increased tax allowances for individuals
Several tax allowances will also be increased from YA 2026/27. This includes:
| Type of tax allowance | Previously | As of the Hong Kong Budget 2026-27 |
|---|---|---|
| Basic allowance | HK$132,000 | HK$145,000 |
| Single parent allowance | HK$132,000 | HK$145,000 |
| Married person’s allowance | HK$264,000 | HK$290,000 |
| Child and additional child allowance | HK$130,000 | HK$140,000 |
| Allowance for maintaining a dependent parent or grandparent aged 50 to 59 | HK$25,000 | HK$27,500 |
| Allowance for maintaining a dependent parent or grandparent aged 60 and above | HK$50,000 | HK$55,000 |
SME Financing Guarantee Scheme extensions
For small and medium-sized enterprises (SMEs) that require financing, support under the SME Financing Guarantee Scheme will continue, with several enhancements. The 80% Guarantee Product application window has been earlier extended to 31 March 2028, giving businesses more time to access guaranteed lending.
Separately, the application period for the principal moratorium arrangement will be extended to mid-November this year. The government will also raise the scheme’s total loan guarantee commitment by HK$20 billion, expanding the total pool of guaranteed financing available in the market.
Other sector-specific initiatives
- Rates concessions for domestic and non-domestic properties for the first two quarters of 2026-27, capped at HK$500 each
- Tax deduction arrangements for capital expenditure in purchasing intellectual property (IP)
- Enhanced tax concessions for maritime services
- Half-rate tax concession for eligible commodities traders
- Upcoming incentive scheme for green vessels registered in Hong Kong
Business setup and expansion support
Meanwhile, more is being done to facilitate companies in using Hong Kong as a launchpad into overseas markets. The Task Force on Supporting Mainland Enterprises in Going Global (GoGlobal Task Force) – a one-stop service platform for Chinese Mainland companies – will organise promotional activities.
Companies can also look forward to a more coordinated support network. A new cross-sectoral professional services platform will be formed to bring together Hong Kong service providers across areas such as legal, accounting, financial services and related fields. This could provide a more streamlined way for companies to access market-entry guidance.
If you’re keen to set up in Hong Kong and then expand in the GBA or other locations, below are some of the Budget measures worth factoring into your plans:
Preferential policy packages
For businesses considering Hong Kong as a base, the government is putting together a more structured set of incentive packages aimed at attracting selected industries and investment. To qualify, companies may be assessed based on factors such as its sector, technology level, and the scale of economic value and job creation it is expected to bring to Hong Kong.
If eligible, companies may expect land grant arrangements, financial subsidies and tax incentives. On the tax side, the preferential rates being considered are either at half rate or 5%.
A preliminary framework has been prepared, with an amendment bill expected to be introduced within 2026. This is an area worth watching closely and our team will continue to monitor developments to guide businesses.
Adjustments to the Dedicated Fund on Branding, Upgrading and Domestic Sales
The Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) is one of the schemes available for Hong Kong enterprises to use and expand beyond the local market. The fund can be used to support the development and promotion of a brand when entering the Mainland of China or other markets that Hong Kong has Free Trade Agreements (FTAs) and/or Investment Promotion and Protection Agreements (IPPAs) with.
The Budget confirms that the scheme has been well-received and will receive a further HK$200 million injection. Under the streamlined “Easy BUD” application track, the funding ceiling will be increased to HK$150,000 per application, up from the previous HK$100,000 cap.
In addition, more targeted support will be introduced for companies pursuing artificial intelligence (AI) related projects.
Shorter approval process for development projects in the Northern Metropolis
The Northern Metropolis is Hong Kong’s long-term development programme for the northern New Territories, covering areas such as Yuen Long and the North District. It is positioned as a major new growth corridor, designed to add housing and economic land while strengthening cross-boundary links.
Against that backdrop, the government plans to have dedicated legislation to speed up its development. The NM Project Supervision Office will also be tasked with facilitating large-scale private developments by strengthening coordination and setting time limits for approvals.
These faster-track administrative arrangements are intended to apply not only within the Northern Metropolis but also to development projects elsewhere in Hong Kong.
“SME Protect Plus” pilot scheme
For SMEs exporting from Hong Kong, a common pinch point is buyer risk, especially when dealing with newer customers or markets where payment reliability is harder to assess. The Hong Kong Export Credit Insurance Corporation (HKECIC) therefore provides export credit insurance that helps with managing the risk of non-payment by overseas buyers.
The HKECIC will launch a new pilot called “SME Protect Plus” to offer more comprehensive risk protection, with particular emphasis on supporting SMEs. More information will be provided at a later stage.
Easing of stamp duty relief for intra-group transfers
The Budget also proposes a more flexible approach to stamp duty relief on intra-group asset transfers. This would broaden the range of “associated body corporates” that can qualify for relief when assets are transferred within the same group as part of an internal restructuring.
While the government plans to introduce an amendment bill within 2026, the revised arrangement will take effect retrospectively for instruments signed from 25 February 2026.
Finance, innovation and AI push
Additionally, Hong Kong is doubling down on its strengths as both an international financial centre and a technology enabler:
Internationalisation of the Renminbi
The Budget reinforces Hong Kong’s positioning as an offshore Renminbi (RMB) hub, aligned with the broader objective of RMB internationalisation. A package of measures is set out.
Notably, the RMB Business Facility was doubled to RMB200 billion (HK$227.27 billion) earlier this month. This may assist financial institutions enterprises and customers can use RMB more widely for trade and cross-boundary business.
The government will also tap into emerging markets to bring more cross-boundary RMB transactions to Hong Kong.
First national manufacturing innovation centre near the Mainland of China
HK$220 million will be set aside to build Hong Kong’s first national manufacturing innovation centre. The centre will be located near the Mainland of China, which could make it easier for companies based here to take part in larger industrial projects, testing and pilot work, and cross-border collaboration while keeping their base in Hong Kong.
At the same time, the government is promoting the full integration of technological innovation and industrial innovation through key infrastructure such as the Hetao Hong Kong Park and San Tin Technopole.
New Committee on AI+ and Industry Development Strategy
In last year’s Budget, AI was identified as becoming a key pillar in Hong Kong’s economy. This Budget 2026-27 further pushes for its integration across industries, with Mr Paul Chan also establishing and chairing the Committee on AI+ and Industry Development Strategy.
The committee will have experts, academics and industry players – with an initial focus on life and health technology as well as embodied AI – to help shape strategy.
AI application courses for upskilling
For companies to deploy AI effectively, it is important that employees know how to use the technology. The Employees Retraining Board (ERB) is being upgraded and rebranded as Upskill Hong Kong. A range of skills-based training courses will be available and include AI application.
Efforts are also focused on the future workforce. For education, universities funded by the University Grants Committee (UGC) will introduce a total of 27 new undergraduate programmes related to Science, Technology, Engineering, Arts and Mathematics (STEAM). This will be over the 2025/26 to 2027/28 triennium, covering AI, creative industries and data science, among other areas.
The government will also commit HK$50 million for public organisations, working with technology companies and tertiary institutions, to run AI application courses, seminars and competitions aimed at students, youths and the public.
How we can help
Amidst global uncertainty, Budget 2026-27 is a positive indicator that Hong Kong is maintaining and improving the conditions for those investing here to then extend their reach into neighbouring markets.
On the ground, we see companies expressing continued interest in consumer goods, finance and logistics, among other sectors. If you’re keen on pursuing business opportunities in Hong Kong or wanting to learn more about the latest Budget measures relevant to your sector, please get in touch.
Our case studies offer examples of the issues companies commonly face during expansion and the solutions we can provide. Explore how we’ve supported companies such as:
- Leading e-commerce shipping platform, Easyship
- Global legal recruitment business, Sonder Consultants
- IT services provider, 7Cento
Frequently asked questions
Are there any changes to corporate taxes in the Hong Kong Budget 2026-27?
No, there is no change to the headline corporate tax rate itself. The Budget introduced a 100% profits tax reduction for YA 2025/26, capped at HK$3,000. This can reduce the actual tax payable for eligible companies for the year. This is an area our tax team can assist on if you’re looking for subsequent filing support.
What government grants for SMEs are introduced in the Hong Kong Budget 2026-27?
The Budget mainly strengthens existing programmes, the most practical one being the updates to the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund). This fund can be used to support business upgrading and market expansion projects. If you’re planning to grow your business from Hong Kong, you may connect with our team for expert guidance.
What are the main business and investor challenges that the Hong Kong government is addressing with its Budget?
The Budget is responding to more structural challenges that matter to businesses and investors such as speeding up land and project delivery, especially through the Northern Metropolis. It is also tackling longer-term competitiveness: how Hong Kong keeps its edge as a finance hub while also building new drivers of value in areas such as AI so companies can scale regionally from Hong Kong.
For more information, please get in touch with us and we can discuss how these priorities may influence your set-up, compliance approach and expansion plan.
How can Hawksford help in aligning my 2026 commercial roadmap with the Budget’s benefits?
Our approach is always to first understand your business. From there, we can then identify any measures that are realistically applicable to your business and guide you through application processes and timelines. Please reach out to us to explore the possibility of establishing operations in Hong Kong.
Speak to our experts today
Get in touch to find out how our Corporate team can support you with your business needs.
