Hong Kong’s economy is projected to grow between 2.5% and 3.5% in 2025, reflecting a steady recovery following 2024’s modest rebound. Despite this growth, the government anticipates a fiscal deficit of HK$48.1 billion, with a balanced budget expected by 2027–2028. Understanding the 2025–26 Budget is crucial for business owners to plan effectively, ensure compliance, and identify growth opportunities. From tax rebates to sector-specific incentives, the budget offers insights that can shape strategic decisions for both new and established businesses. Let’s explore what these measures mean for you.
Key Summary
Tax Relief
100% profits and salaries tax rebates (capped at HK$1,500–3,000). Property tax adjustments free up cash for businesses.
SME Support
Rates concessions, rental subsidies, and extended SME Financing Guarantee Schemes reduce costs and improve liquidity.
Sector Incentives
Funding for GreenTech, FinTech, advanced manufacturing, tourism, and AI startups drives innovation and growth.
Talent Development
Top Talent Pass expansion, faster visas, and co-funded training help attract and upskill employees.
ESG & Compliance
Stricter ESG rules and digital asset regulations require stronger governance and internal controls.
Key Tax Changes for Businesses and Individuals
The 2025–26 Hong Kong Budget introduces several tax measures designed to relieve financial pressure for both individuals and businesses, particularly small and medium-sized enterprises (SMEs). These initiatives aim to boost liquidity, support spending power, and create a more business-friendly environment.
Profits Tax Rebate
For the 2024–25 assessment year, corporations will enjoy a 100% profits tax rebate, capped at HK$3,000. This measure provides immediate financial relief for businesses, helping SMEs manage operational costs, reinvest in growth, and strengthen cash flow amid ongoing economic recovery.
Salary Tax and Personal Assessment
Individuals and sole proprietors will benefit from a 100% rebate on salaries tax, also capped at HK$3,000, covering around 1.9 million taxpayers. This rebate increases disposable income, which can indirectly support businesses through higher consumer spending.
Property Tax and Stamp Duty
The government has implemented significant relaxations in property-related taxes:
- Abolition of Buyer’s Stamp Duty (BSD) and New Residential Stamp Duty (NRSD) to encourage property transactions.
- Special Stamp Duty (SSD) shortened from 3 years to 2 years, reducing costs for early resale.
These adjustments free up cash for both businesses and individuals, fostering a healthier property market and improving liquidity.
No Increase in Major Tax Rates
The government maintains existing corporate and personal tax rates and does not introduce broad-based taxes such as GST. This cautious approach balances fiscal responsibility with support for businesses, ensuring stability while avoiding new financial burdens.
These key tax measures collectively provide a more predictable and supportive tax environment, allowing business owners and individuals to plan strategically and invest confidently in the year ahead.
Read: Introduction to the Hong Kong Tax System
Public Relief Initiatives for SMEs and Sole Proprietors
The 2025–26 Hong Kong Budget introduces a range of public relief measures to help SMEs and sole proprietors navigate financial pressures, sustain operations, and encourage domestic spending. These initiatives are particularly vital for smaller businesses and startups seeking stability and growth amid a recovering economy.
Rates Concessions
Non-domestic properties, including retail shops, office spaces, and other commercial premises, will benefit from rate concessions of up to HK$1,000 per quarter for the first two quarters of 2025–26. This reduction in overhead costs eases the financial burden on businesses and helps improve cash flow for day-to-day operations.
Electricity Subsidy
Households will receive a HK$1,000 electricity subsidy. While this measure targets residents rather than businesses directly, it increases disposable income, boosting consumer spending and indirectly benefiting local businesses across retail, hospitality, and services sectors.
Rental Support for Government Property Tenants
SMEs operating in government-owned properties, including industrial estates, public markets, and co-working hubs, will continue to enjoy rental concessions. This support is especially helpful for startups and microbusinesses, allowing them to allocate funds toward growth and operational efficiency rather than fixed rental expenses.
SME Financing Guarantee Scheme
The government has extended the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme, providing businesses with enhanced access to credit. This extension ensures vital liquidity for SMEs, enabling them to stabilise operations, invest in expansion, and remain resilient during periods of economic uncertainty.
These public relief measures collectively strengthen the financial foundation for SMEs and sole proprietors, allowing business owners to focus on growth, innovation, and workforce development while benefiting from reduced operating costs and improved liquidity.
Sector-Specific Incentives
The 2025–26 Hong Kong Budget provides targeted support for key sectors, creating opportunities for businesses to innovate, expand, and align with government priorities. These incentives are designed to drive economic growth while promoting sustainability, technological advancement, and tourism development.
Green Tech
The government continues to fund low-carbon infrastructure and green innovation, supporting businesses that develop sustainable technologies. Companies engaging in renewable energy, energy efficiency, or environmental solutions may access grants, pilot programs, or partnership opportunities, positioning themselves as leaders in Hong Kong’s green economy.
Fintech
Hong Kong strengthens its role as a global fintech hub through regulatory sandboxes and financial innovation support. Startups and established firms alike can leverage a flexible regulatory environment to test innovative products and services, access funding, and collaborate with financial institutions, driving digital transformation across the sector.
Tourism & Events
Investment in mega-events and cultural tourism continues, enhancing Hong Kong’s appeal as a global destination. This boosts revenue potential for businesses in hospitality, retail, entertainment, and creative industries. Companies can tap into increased foot traffic, partnerships, and marketing support arising from government-led tourism initiatives.
Advanced Manufacturing
The Northern Metropolis development aims to support high-end manufacturing and tech sectors by providing land, logistics infrastructure, and funding support. Businesses involved in advanced manufacturing, robotics, and technology-driven production can benefit from strategic location advantages, streamlined access to resources, and government-backed incentives to drive innovation and scale operations.
These sector-specific initiatives create a favourable environment for businesses aligned with strategic government priorities, offering not just financial relief but also long-term growth opportunities in sustainability, technology, tourism, and manufacturing.
Hiring and Talent Support
The 2025–26 Hong Kong Budget emphasises workforce development, aiming to address labour shortages and strengthen the city’s competitiveness. These measures benefit employers by providing access to talent, reducing recruitment barriers, and encouraging workforce adaptability.
Top Talent Pass Scheme Expansion
The government is expanding the Top Talent Pass Scheme, making it easier for businesses to hire skilled foreign professionals. This initiative targets high-demand roles in innovation, technology, finance, and other strategic sectors, enabling companies to tap into a global talent pool to drive growth and innovation.
Visa Streamlining for In-Demand Sectors
Visa application processes are being streamlined for sectors such as Innovation & Technology (I&T), healthcare, and other high-demand industries. Faster and simpler visa approvals allow businesses to recruit the talent they need without lengthy delays, ensuring critical projects and operations are not hindered by workforce gaps.
Upskilling and Training Support
The budget also encourages workforce upskilling and retraining, supporting employers in enhancing employee skills. The government may co-fund training programs, enabling businesses to develop local talent while improving workforce adaptability. This is especially valuable for tech, professional services, and emerging industries where skills need to evolve rapidly.
Read: How To Apply For Hong Kong’s Top Talent Pass Scheme (TTPS)
Regulatory & Legal Updates
The 2025–26 Hong Kong Budget introduces important regulatory and legal updates aimed at aligning local standards with global best practices. These measures primarily affect listed companies, financial institutions, and businesses engaged in cross-border operations or digital asset activities.
ESG Disclosure Requirements
The government is intensifying sustainability reporting rules, particularly for listed companies and financial institutions. Firms are now expected to:
- Expand the breadth and depth of ESG disclosures.
- Integrate ESG considerations into business strategy and operations.
- Demonstrate tangible progress toward national carbon-neutrality goals.
These requirements reflect Hong Kong’s commitment to green finance and responsible business practices. Companies that comply can enhance their corporate reputation, attract ESG-conscious investors, and gain a competitive advantage in global markets.
Audit & Compliance Standards
In addition to ESG regulations, the budget highlights stricter audit and compliance standards, including:
- Heightened oversight of cross-border tax matters, ensuring transparency and adherence to international tax norms.
- Regulations on digital assets, including cryptocurrencies and other fintech innovations, requiring stronger internal controls and governance frameworks.
These updates signal that companies must strengthen internal compliance, improve risk management, and stay ahead of regulatory changes to avoid penalties.
Budget Spending and Business Implications
The 2025–26 Hong Kong Budget outlines a strategic allocation of resources across key sectors, creating opportunities for businesses to grow, innovate, and strengthen competitiveness. Here’s a breakdown of the major expenditure areas and their potential business implications:
Education & R&D Grants
With a total allocation of $112.4 billion, the government is launching a $1.5 billion Research Matching Grant Scheme.
- This initiative supports the development of a better-skilled workforce.
- Businesses can explore collaborations with educational institutions, benefiting from research partnerships and innovation opportunities.
Healthcare & Social Welfare
An allocation of $141 billion for healthcare and $139.1 billion for social welfare ensures improved employee wellbeing:
- Access to better healthcare facilities reduces employee stress and absenteeism.
- Social welfare initiatives, such as Community Care Service Vouchers, indirectly support employees managing family responsibilities.
Infrastructure & Capital Works
With $119.3 billion allocated to infrastructure, businesses can benefit from:
- Expedited development in the Northern Metropolis.
- Improved logistics and transport networks, enhancing efficiency for supply chains and commuting.
- New opportunities in construction, urban services, and property-related sectors.
Innovation & Technology
The budget sets aside $1 billion for a new Hong Kong Artificial Intelligence Research and Development Institute:
- Tech startups gain access to government-supported R&D resources.
- Encourages innovation, fosters digital transformation, and strengthens Hong Kong’s position as a technology hub.
Environment & Sustainability
With $53.5 billion directed to environment and food initiatives:
- Subsidies, such as $300 million for fast-charging stations, incentivize green business practices.
- Encourages adoption of sustainable technologies and corporate ESG compliance, aligning with global environmental standards.
Culture & Tourism
A $1.23 billion allocation to the Hong Kong Tourism Board promotes cultural tourism and mega-events:
- Businesses in hospitality, retail, and creative sectors can expect increased foot traffic and consumer spending.
- Creates opportunities for collaboration with events, exhibitions, and tourism campaigns.
The 2025–26 Budget reflects a balanced approach, combining economic development with social wellbeing. By leveraging targeted funding, tax incentives, and sector-specific support, Hong Kong businesses can enhance operations, attract talent, and innovate sustainably.
Budget Comparison: 2024-2025 vs 2025-2026
To help Hong Kong business owners quickly grasp the key changes between the 2024–25 and 2025–26 budgets, here’s a side-by-side summary of major economic and business-related measures:
| Category | 2024–25 Budget | 2025–26 Budget |
| GDP Growth Forecast | 2.5% to 3.5% | 2% to 3% |
| Fiscal Balance | Forecast consolidated deficit of $48.1B | Forecast consolidated deficit of $67.0B |
| Profits Tax Rebate | 100% rebate, capped at $3,000 (2023/24 assessment year) | 100% rebate, capped at $1,500 (2024/25 assessment year) |
| Rates Concession (Non-Domestic) | Concession for first quarter, capped at $1,000 | Concession for first quarter, capped at $500 |
| SME Financing Support | 80% & 90% Guarantee Products extended to March 2026 | Principal moratorium for SME Financing Guarantee Scheme lasts until November 2025 |
| Stamp Duty on Property | Special Stamp Duty, BSD, NRSD canceled | Adjusted ad valorem rates; maximum chargeable property value for $100 duty increased to $4M |
| Sector Incentives | $3B for AI Supercomputing Centre, $1.4B Film Development Fund, green shipping & aviation | $1B AI R&D Institute, GreenTech Hub, $1.23B Tourism Board |
| ESG & Compliance | Green & Sustainable Finance Grant Scheme extended to 2027 | Global minimum tax proposal (BEPS 2.0) to generate ~$15B revenue annually |
Key Takeaways for Business Owners:
- The 2025–26 budget continues to provide targeted support for SMEs and innovation-driven sectors, while introducing tighter compliance and ESG requirements.
- Adjustments in tax rebates and rates concessions highlight the need for careful financial planning and cash flow management.
- Sector-specific incentives and R&D funding offer opportunities for expansion, collaboration, and sustainable growth.
Implications for Hong Kong Businesses
The 2025–26 Hong Kong Budget offers substantial benefits for businesses, including cost relief, easier access to funding, and growth opportunities across key sectors. Companies are encouraged to align their strategies with green, technology, and innovation-driven industries, tapping into government incentives like the GreenTech Hub, AI R&D Institute, and tourism investments. At the same time, tighter ESG disclosure requirements and emerging digital asset regulations mean businesses must strengthen compliance frameworks and internal controls to stay ahead of evolving legal standards. By proactively leveraging these opportunities, Hong Kong businesses can not only enhance competitiveness but also secure long-term sustainable growth.
Conclusion
The 2025–26 Budget reflects Hong Kong’s strategic focus on economic recovery, innovation, and sustainability, offering businesses targeted support in tax relief, financing, talent development, and sector-specific incentives. From fostering a skilled workforce through education and R&D grants to boosting green initiatives, technology adoption, and cultural tourism, the budget provides opportunities for growth while emphasizing strong compliance and ESG practices. Businesses that align with these priorities and strategically tap into available funding and incentives are well-positioned to thrive in Hong Kong’s evolving market landscape.
FAQs
Is Hong Kong’s economy recovering in 2025?
Yes. Growth is projected at 2%–3%, supported by tourism, consumer spending, and investment, signaling a steady recovery.
What are the major goals of the 2025–26 Budget?
The budget aims to stabilize the economy, support SMEs, invest in innovation and infrastructure, and return to fiscal balance by 2027–28.
Who benefits most from the new budget?
SMEs, tech innovators, and property buyers are the primary beneficiaries, thanks to tax rebates, financing schemes, and stamp duty adjustments.
How will businesses be affected?
Businesses gain cost relief, improved funding access, and targeted sector incentives, while also needing to comply with stricter ESG and digital asset regulations.
Should entrepreneurs adjust plans post-budget?
Yes. This is an ideal time to tap into funding, optimize tax positions, and align with green, tech, and innovation-driven growth opportunities.
