On 25 February 2026, Hong Kong’s Financial Secretary, Paul Chan Mo-po announced the 2026-2027 Hong Kong Budget. He projects Hong Kong’s economy to grow at an average rate of 3% annually between 2027 and 2030.
We cover essential highlights for businesses and HR leaders to take note of:
Tax Relief Measures for Residents and Businesses
A series of tax relief measures aimed at supporting both individuals and businesses was introduced. Key measures include:
- Salaries tax and personal assessment: 100% reduction, capped at HK$3,000
- Profits tax: 100% reduction, capped at HK$3,000
- Domestic property rates: concession for the first two quarters of 2026/27, capped at HK$500 per property
- Non-domestic property rates: concession for the first two quarters of 2026/27, capped at HK$500 per property
HK$50 million ‘AI for All’ Initiative
A HK$50 million investment to roll out AI courses, seminars and competitions aimed at students, young people and the wider public, with the goal of enhancing AI awareness and skills was announced. The initiative will be delivered through collaboration between public organisations, technology companies and tertiary institutions.
Between 2025/26 and 2027/28, publicly funded universities will introduce 27 undergraduate programmes across STEAM fields, including AI, data science and the creative industries. From the 2027/28 academic year, AI-related programmes will also be prioritised under the Study Subsidy Scheme for Designated Professions/Sectors.
Welfare Support Measures and Higher Family Tax Allowances
An additional one-month payment at the standard rate for recipients of Comprehensive Social Security Assistance, Old Age Allowance, Old Age Living Allowance and Disability Allowance, with similar arrangements for Working Family Allowance recipients was announced. This measure is expected to cost around HK$6.5 billion (US$831 million).
Several tax allowances will also increase in the upcoming year of assessment:
- Basic and single parent allowance: HK$132,000 to be increased to HK$145,000
- Married person’s allowance: HK$264,000 to be increased to HK$290,000
- Child and additional child allowance: HK$130,000 to be increased to HK$140,000
- Dependent parent/grandparent (aged 60+): HK$50,000 to be increased to HK$55,000
- Dependent parent/grandparent (aged 50–59): HK$25,000 to be increased to HK$27,500
- Elderly residential care expense cap: HK$100,000 to be increased to HK$110,000
Additional Tax Revenue Measures
Starting from 26 February 2026, stamp duty on residential property transactions exceeding HK$100 million will increase from 4.25% to 6.5%. This change is expected to affect around 0.3% of transactions and generate approximately HK$1 billion in annual revenue.
In addition, following amendments to the Inland Revenue Ordinance last year, Hong Kong will implement a global minimum tax and a minimum top-up tax on large multinational enterprises. This measure is projected to generate around HK$15 billion annually from the 2027/28 financial year onwards.
Enhanced Support Measures for SMEs
A series of initiatives to strengthen support for small and medium-sized enterprises (SMEs) is in place. These include a HK$200 million (US$25.6 million) injection into the Dedicated Fund on Branding, Upgrading and Domestic Sales, alongside a higher funding ceiling per application and increased support for AI adoption.
The Hong Kong Export Credit Insurance Corporation will also launch a pilot scheme this year to provide protection for exporters dealing with higher-risk buyers.
Accelerating MPF Reforms and eMPF Implementation
Reforms to the Mandatory Provident Fund (MPF) will be accelerated to provide employees with greater control over their retirement savings. The eMPF platform is set to reach key milestones this year, with several major schemes scheduled for onboarding in March and April.
He also highlighted that the platform’s standardised administration will drive mandated fee reductions, helping to lower overall costs for members.
Expanded Tax Concessions for Family Offices
Enhancements to Hong Kong’s tax concession regime was introduced to attract more family offices and investment funds.
The changes will include a broader definition of qualifying assets and simplified rules. Legislative proposals, expected in the first half of 2026, will expand eligible investments to cover precious metals, loans, private credit and digital assets.
Pioneering the ‘AI+’ Strategy
Chan highlighted the “AI+” initiative as a key pillar of Hong Kong’s ambition to become a global hub for artificial intelligence.
To drive this, he will chair a new AI+ and Industry Development Strategy Committee, responsible for shaping policies that promote the integration of AI across industries.
The committee will also guide relevant policy bureaus in developing preferential packages, including tax incentives, financial subsidies and land grants, to attract high-potential AI enterprises.
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For further information on the 2026-27 Hong Kong Budget, please head over to the official government website: https://www.budget.gov.hk/2026/eng/index.html