The Hong Kong tax system is one of the most straightforward and attractive anywhere. It is a territorial system that levies tax on income arising in or originating from Hong Kong, with a statutory rate set at 16.5 per cent for corporations and up to 17% for unincorporated business or individuals. Start-ups and smaller businesses benefit from a two-tier profits tax regime that taxes the first HK$2 million of assessable profits at 8.5% for corporations and 7.5% for unincorporated business.
There is no Hong Kong tax on dividend payments or capital gains. That applies also on dividends from foreign companies because they count as foreign-sourced income.
The tax year runs from 1st April to 31st March.
Pacific Jade’s highly-qualified expert Hong Kong tax team is happy to advise on the detail of the Hong Kong tax regime and to handle compliance work, covering issues ranging from arms-length transactions and country-by-country reporting, through to specialised sector incentives, salaries tax and statutory annual filings. We have deep experience managing the tax affairs for a range of local and international businesses, including publicly-listed companies, and can advise on individual tax matters.
Wednesday 25th February 2026:
We welcome the Hong Kong Government’s reconfirmation in today’s Budget speech to maintain the competitiveness of Hong Kong’s simple and low tax regime by avoiding the introduction of new taxes or any significant increase in tax rates.
It is proposed that both businesses and individuals will benefit from a one-off tax rebate of 100% up to HK$3,000 (increased from HK$1,500 for 2024/25) for salaries tax, tax under personal assessment and profits tax. The rebates will be applied to tax levied for the current fiscal year, 2025/26. They will be against the final tax assessment after 2025/26 Individual Income Tax Returns and Profits Tax Returns are filed.
Single family offices featured among the intended beneficiaries of reviews and revisions promised by Financial Secretary Paul Chan, with enhancements to include an expansion of the scope of “fund” to cover specific funds-of-one, and an enlargement of qualifying investments eligible for tax concessions. An existing drive to attract single-family offices to Hong Kong has already seen the number grow to more than 3,300.
Also set to benefit from promised reviews are the IP and R&D expenditures, and the tax regimes for corporate treasury centres, and the maritime service industry. Furthermore, relaxing the criteria for stamp duty relief in relation to the intra-group transfer of assets will enhance the business environment and facilitate internal restructuring by enterprises.
To ease the financial burden of general public, Chan additionally announced an increase in the basic allowance, married person’s allowance, single parent allowance, child allowance, additional child allowance, dependant parent and dependant grandparent allowance, as well as additional dependant parent and dependant grandparent allowance.
Chan also said the Government hoped to continue expansion of its double taxation agreements, having added Jordan, Maldives, Norway and Rwanda last year.
But disappointingly, as in prior years - In the face of continuing pressure on public finances the Government did not enhance the City’s competitiveness by proposing further tax incentives such as profits tax concessions for qualifying regional headquarters and company set-up expenses, or tax credits for start-up companies.
Neither is it introducing more tax measures to help the SME community conduct business in Hong Kong or to alleviate the living costs of Hong Kong citizens by increasing the deduction ceiling of home loan interest and domestic rents for personal tax purpose.
The highlights of the Budget are as follows:
No change is proposed for the below existing two-tiered standard rates regime for salaries tax and tax under personal assessment:
|
Starting from the year of assessment 2026/27, the following allowances will be changed:
Basic Allowance and Single Parent Allowance: increasing from HK$132,000 to HK$145,000
Married Person’s Allowance: increasing from HK$264,000 to HK$290,000
Child Allowance and Additional Child Allowance: increasing from HK$130,000 to HK$140,000
Dependant Parent and Dependant Grandparent Allowance:
- for aged 60 or above or eligible to claim allowance under the Disability Allowance Scheme: increasing from HK$50,000 to HK$55,000
- for those aged 55 to 59: increasing from HK$25,000 to HK$27,500
Additional Dependant Parent and Dependant Grandparent Allowance:
- for aged 60 or above or eligible to claim allowance under the Disability Allowance Scheme: increasing from HK$50,000 to HK$55,000
- for those aged 55 to 59: increasing from HK$25,000 to HK$27,500
A summary of the allowances and deductions for 2025/26 and 2026/27 is shown as below:
|
No change is proposed. Tax Bands for salaries tax from year of assessment 2026/27 onwards are as follows:
|
The Financial Secretary noted the following:
In view that close economic integration of Hong Kong with the GBA brings about opportunities for cross-boundary scientific collaboration, technology transfer and the development of emerging and future industries, the Government will review and enhance tax arrangements for R&D expenditures.
To attract more family offices and funds to set up in Hong Kong, the Government will enhance Hong Kong’s tax regime, including expanding the scope of “fund” to cover specific funds-of-one, as well as classifying digital assets, precious metals, specified commodities, etc. as qualifying investments eligible for tax concessions. An amendment bill will be introduced in the first half of 2026, with a view to effecting the implementation from the year of assessment 2025/26.
The Government will provide a stamp duty waiver for the transfer of non-residential properties into real estate investment trusts (REITs) seeking to list. The relevant amendment bill will be introduced in the first half of next year.
To strengthen the role of Hong Kong as a key base for the establishment of Corporate Treasury Centres (CTCs), a series of enhancement measures will be announced in the middle of this year, including providing additional tax incentives and flexibility to CTCs and their associated companies, and introducing a pre-approval mechanism.
To enhance the business environment and facilitate internal restructuring by enterprises, the Government proposes to relax the criteria for stamp duty relief in relation to the intra-group transfer of assets. An amendment bill will be introduced this year and the new arrangement will apply retrospectively to instruments signed from today.
The Government will amend the Inland Revenue Ordinance (IRO) for implementing the Crypto-Asset Reporting Framework as well as the amended Common Reporting Standard (CRS) by the Organisation for Economic Co-operation and Development (OECD) in the coming two years. This will contribute to international efforts in enhancing tax transparency and combating cross-border tax evasion.
The Government will explore offering tax incentives for eligible institutions conducting gold trading and settlement in Hong Kong.
While Hong Kong has so far signed a total of 55 Comprehensive Avoidance of Double Taxation Agreements (CDTA), including those signed with Jordan, Maldives, Norway and Rwanda last year, Hong Kong will further expand its CDTA network.
To attract enterprises and investment, the Government has formulated a preliminary framework, which would take into account a series of factors, including the enterprise's industry and its technology level, as well as the potential economic contributions and employment opportunities it can bring to Hong Kong. Policy tools include land grant arrangements, financial subsidies and tax incentives. The preferential tax rates will be half-rate or 5%.
In view of the evolving global tax environment in recent years, the Financial Secretary will establish and chair an Advisory Committee on Tax Policy to gather views widely from commercial, industrial and professional sectors, so that Hong Kong's tax policy can reinforce economic development.
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.
The Government is consulting on tax deduction arrangements for capital expenditure incurred for purchasing Intellectual Property (IP) or the rights to use IP. An amendment bill will be introduced this year.
The first registration tax (FRT) for electric commercial vehicles, electric motorcycles and electric motor tricycles will continue to be waived in full until end-March 2028. However, the current FRT concession arrangement for electric private cars will not be extended beyond its expiry at the end of March this year.
The Government reiterates to maintain the competitiveness of Hong Kong’s simple and low tax regime, and to avoid raising tax rates substantially or introducing new taxes.
The rates of stamp duty on residential property transactions valued above $100 million will be raised from 4.25% to 6.5%. This measure will take retrospective effect from tomorrow upon passage of the amendment bill by the LegCo.
Rates for non-domestic properties will be waived for the first two quarters of 2026/27, subject to a ceiling of HK$500 for each rateable non-domestic property.
The Government will continue providing loan guarantees to enterprises through the SME Financing Guarantee Scheme. The Government has extended the application period for the 80% Guarantee Product to the end of March 2028 and also extended the application period for the principal moratorium arrangement to mid-November this year.
The Government will inject HK$200 million into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund), raise the funding ceiling of “Easy BUD” to HK$150,000 per application, and provide more targeted funding support for enterprises in AI application.
The Hong Kong Export Credit Insurance Corporation will introduce a pilot scheme this year to provide protection for SMEs engaging in exports with higher-risk buyers.
The Government will waive fees of certificates issued by Centre for Food Safety for food product export for 2 years and will Introduce a new unified brand for local agricultural and fisheries products.
The Government will provide an extra 1 month allowance of the standard Comprehensive Social Security Assistance (CSSA) payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance, while similar arrangements will also apply to recipients of the Working Family Allowance.
The Government embarked HK$4 billion to support long-term housing arrangements for those affected by Tai Po Fire. In addition, HK$3 billion will be embarked to support new subsidy scheme for Operation Building Bright 2.0 and HK$1 billion will be to extend Lift Modernisation Subsidy Scheme.
The Government will allocate HK$50 million to help public organisations, tech enterprises and tertiary institutions set up AI application courses, seminars and competitions.
The Government will embark HK$100 million to accelerate Government digital transformation with leading technologies.
HK$500 million will be injected into the Chinese Medicine Development Fund to support strategic research, training and international publicity.
The Government will earmark about HK$220 million for establishing in Hong Kong the first national manufacturing innovation centre outside the Mainland.
The Government will seek to inject a funding of HK$10 billion to the park company to accelerate the development of the Hetao Hong Kong Park.
The Government will seek to inject a funding of HK$10 billion as initial capital to take forward the development of San Tin Technopole.
The Government will reduce transaction costs for RMB and other currency conversions; attract more RMB-denominated bond issuances in Hong Kong; and explore formation of offshore RMB yield curve.
The Government will expedite launch of Chinese Government Bond futures in Hong Kong, inclusion of REITs in mutual access, and inclusion of RMB trading counter under Southbound Stock Connect.
HK$100 million will be injected to attract international, large-scale exhibitions with new elements.
The Government will step up publicity to attract more enterprises to redomicile to and establish in Hong Kong.
HK$28 million will be embarked to support the Hong Kong Technology and Innovation Support Centre to provide patent evaluation and implement a 2-year Pilot Patent Valuation Support Scheme.
HK$52 million has been embarked for Intellectual Property Academy on 2-year pilot.
The Government will provide port dues concessions for green vessels and offer incentives for green vessels registered in Hong Kong. HK$34 million expenditure will be involved.
We trust you will find the above useful information. Should you have any questions, please do not hesitate to contact us on (852) 3705 0095 or [email protected].