Hong Kong Budget 2026-27: Tax Highlights

Introduction

Financial Secretary Paul Chan announced Hong Kong’s 2026-27 Budget on 25 February. As highlighted early in the speech, a booming economy and capital market have driven higher tax revenues, while a reinforced fiscal consolidation programme has helped public finances improve sooner than expected.

Anchored by the theme “Driving High‑quality, Inclusive Growth with Innovation and Finance”, the Budget focuses on sustaining growth momentum, advancing long‑term capability building and positioning Hong Kong to capture new opportunities.

Overall, the Budget signals that Hong Kong is entering this budget cycle from a position of confidence and stability, with the Government committed to partnering with businesses and citizens to navigate change and support the next phase of development.

In recognition of the evolving global tax environment and the role of tax policy in reinforcing economic development, the Financial Secretary announced that he will establish and chair a Tax Policy Advisory Committee to gather views from commercial, industrial and professional sectors.

A&M: The Government has committed to an ambitious and wide-ranging programme of tax enhancements and amendment bills, spanning asset and wealth management, corporate treasury activities, IP development, biohealth and biomedicine technology, maritime and commodities trading, as well as refinements to stamp duty and R&D incentives.

Economic and Fiscal Snapshot

• Economic growth: Hong Kong’s economy grew by 3.5% in 2025, marking the third consecutive year of expansion, supported by strong external trade and a recovery in domestic demand.
• Public finances: Hong Kong’s Consolidated Account is expected to be broadly balanced for the 2025‑26 fiscal year, after taking into account bond proceeds, reflecting stronger than expected revenue performance.
• Financial markets: The Hang Seng Index rose by 28% over the year, with average daily turnover increasing by 90% to nearly $250 billion and IPO fundraising exceeding $280 billion, ranking first globally.
• Economic outlook: Hong Kong’s economy is forecast to grow by 2.5%-3.5% for the year ahead, with a headline inflation rate expected to remain moderate at 1.8%.
• Global minimum tax: Implementation of the OECD global minimum tax and Hong Kong minimum top‑up tax for large multinational enterprise groups is expected to generate approximately $15 billion in additional tax revenue annually, starting from 2027-28.

These economic and fiscal conditions provide important context for the tax policy measures announced in the 2026-27 Budget.

Key Tax Announcements

1. Asset and Wealth Management 

The Government confirmed that its proposed refinements to Hong Kong’s tax regimes for funds will include funds-of-one, and will treat digital assets, precious metals and specified commodities as qualifying investments eligible for tax concessions.  An amendment bill is expected to be introduced in the first half of this year, with implementation from the 2025-26 year of assessment.

A&M: This is a welcome clarification for the asset and wealth management industry, following the Government’s release of the 2024 consultation paper and subsequent industry discussions on enhancements to Hong Kong’s tax concession regimes for funds.

The Government will also provide a stamp duty waiver on the acquisition of non-residential property for real estate investment trusts which seek to list in Hong Kong, where specified conditions are met. The relevant amendment bill will be introduced in the first half of next year.

2. Stamp Duty Relief for Intra-Group Transfers

The Government proposes to relax the criteria for stamp duty relief on intra-group transfers under section 45 of the Stamp Duty Ordinance to:

• Expand the scope of qualifying associated bodies corporate; and
• Lower the minimum threshold for association between the transferor and the transferee from 90% to 75%.

An amendment bill is proposed to be introduced this year, with the changes applying retrospectively to instruments signed on or after 25 February 2026.

A&M: This development is particularly notable in the context of the Court of Final Appeal’s 2025 John Wiley decision, which confirmed the narrow application of intra‑group stamp duty relief under the existing legislation.

3. Crypto-Asset Reporting Framework and amended Common Reporting Standard

The Government intends to introduce the relevant bills and have them passed by LegCo in 2026 with implementation of Crypto-Asset Reporting Framework (CARF) on 1 January 2027 and of amended Common Reporting Standard (CRS) on 1 January 2028.

4. Corporate Treasury Centres

The Government will announce a series of enhancement measures aimed at Corporate Treasury Centres (CTCs), including additional tax incentives, improved flexibility for CTCs and their associated companies, and the introduction of a pre-approval mechanism.

5. Regional Intellectual Property Trading Centre

The Government announced plans to refine the intellectual property tax regime and institutional framework. It is consulting on tax deduction arrangements for capital expenditure incurred for purchasing intellectual property or the rights to use intellectual property and plans to introduce an amendment bill this year.

6. Research & Development 

The Government has indicated that it will review and enhance tax arrangements relating to R&D expenditure.

7. Expand Commercial and Trade Network

The Government is committed to expanding Hong Kong’s network of Comprehensive Avoidance of Double Taxation Agreements, which currently comprises 55 agreements, including those signed last year with Jordan, Maldives, Norway and Rwanda.

8. Tax Policy Advisory Committee

In view of the evolving global tax environment, the Financial Secretary will establish and chair an Advisory Committee on Tax Policy to gather views from commercial, industrial and professional sectors, so that Hong Kong’s tax policy can reinforce economic development.

9. High Value-Added Maritime Services

An amendment bill will be introduced in the first half of this year to enhance tax concession measures for the maritime service industry and provide a half-rate tax concession to eligible commodities traders. These measures are intended to further promote the development of high value-added maritime services in Hong Kong.

10. Build the International Gold Trading Market

Following the signing of a cooperation agreement with the Shanghai Gold Exchange earlier this year and the establishment of Hong Kong’s central clearing system for gold, the Government plans to explore tax incentives for eligible institutions conducting gold trading and settlement in Hong Kong.

11. Stamp Duty on Residential Property Transactions

The rate of stamp duty on residential property transactions valued above $100 million will be raised from 4.25 per cent to 6.5 per cent. The new rates apply to any instrument executed on or after 26 February 2026 for the sale and purchase or transfer of residential property.

12. Supporting People and Enterprises

• A one-off 100% reduction in 2025-26 salaries tax and tax under personal assessment, capped at $3,000.
• A one-off 100% reduction in 2025-26 profits tax, capped at $3,000.
• Starting from the year of assessment 2026-27, the Government proposes to:
  • Increase the basic allowance and single parent allowance from $132,000 to $145,000, and the married person’s allowance from $264,000 to $290,000;
  • Increase the child allowance and additional child allowance from $130,000 to $140,000; and
  • Increase the allowance for maintaining a dependent parent or grandparent and raising the deduction ceiling for elderly residential care expenses as follows:
    • Increase the allowance for maintaining a dependent parent or grandparent aged 60 or above from $50,000 to $55,000;
    • Increase the allowance for maintaining a dependent parent or grandparent aged 55 to 59 from $25,000 to $27,500; and
    • Raise the deduction ceiling for eligible elderly residential care expenses from $100,000 to $110,000.
• Rates concessions for domestic and non-domestic properties will be granted for the first two quarters of 2026/27, each subject to a ceiling of $500 for each rateable property.
• Eligible social security recipients will receive an allowance equal to one month of the standard rate CSSA payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance, with Working Family Allowance recipients to receive similar allowance.

Conclusion

The Hong Kong Budget 2026-27 places tax policy firmly at the centre of the Government’s strategy. Against a backdrop of strengthened public finances, the Budget signals a clear commitment to delivering a wide‑ranging programme of tax enhancements and legislative amendments in the near term, spanning asset and wealth management, corporate treasury centres, intellectual property, biohealth and biomedicine technology, maritime and commodities trading, as well as targeted adjustments to stamp duty and R&D incentives.

With multiple amendment bills expected to be introduced, businesses and investors should anticipate numerous tax developments over the coming months.