On 26 February 2025, Hong Kong’s Financial Secretary announced the Budget for the fiscal year 2025-26, outlining economic forecasts, tax policies, and support measures aimed at strengthening the city’s economy.

Economic Outlook

Despite a complicated and changing environment, Hong Kong’s economy grew by 2.5% in 2024. Employment remained stable, inflation was moderate, and the city continued to attract businesses, talent, and tourists.

Looking ahead for 2025, the Financial Secretary opines that Hong Kong will still face a challenging external environment, such as an unstable international geopolitical situation, trade protectionism and elevated global interest rates.

Having said that, a moderate economic growth of 2% to 3% is forecasted, driven by positive factors such as mainland China’s growing economy.

Key support and relief measures

As prior year, the Budget introduces a series of initiatives to strengthen the foundation of Hong Kong and drive development in sectors, such as:

• Innovation and technology
• International finance and trade
• Tourism
• Green development
• Attracting business, capital and talent.

Major tax measures for enterprises

• Profits tax reduction: 100% reduction of profits tax for the year of assessment 2024/25 subject to a ceiling of HKD 1,500 per case.

• Rates concession: Non-domestic properties receive a rate concession for the first quarter of 2025/26, subject to a ceiling of HKD 500 for each rateable property.

Major tax measures for individuals

• Salaries tax reduction: 100% reduction of salaries tax for the year of assessment 2024/25 subject to a ceiling of HKD 1,500 per case.

• Rates concession: Domestic properties receive a rate concession for the first quarter of 2025/26, subject to a ceiling of HKD 500 for each rateable property.

• Stamp duty relief: The HKD 100 stamp duty threshold increases from HKD 3 million to HKD 4 million with immediate effect.

• Higher air passenger departure tax: From 1 October 2025, the departure tax rises from HKD 120 to HKD 200 per passenger.

Other major tax-related issues

Tax deduction on intellectual property (“IP”) related expenditures

To accelerate the development of IP-intensive industries and promote the development of IP trading in Hong Kong, the Hong Kong government will review the tax deduction arrangements regarding various IP-related expenditures. This includes the lump sum licensing fees for acquiring the rights to use the IP, and the expenses related to purchasing IP or the rights to use IP from associates.

Preferential tax regimes for funds, single family offices and carried interests

The government is set to refine the existing preferential tax regimes for funds, single family offices and carried interests this year. Proposed enhancements include:

• expanding the scope of funds under the tax exemption regime;
• increasing the types of qualifying transactions eligible for tax concessions for funds and single-family offices; and
• enhancing the tax concession arrangement on the distribution of carried interest by private equity funds, etc.

Tax incentives for maritime services and green shipping

Hong Kong has previously introduced a series of tax measures to support the development of the maritime industry. In light of changes of the international tax rules, the government considers further enhancements, including:

• Ship acquisition tax deductions for ship lessors under operating leases
• A half-rate tax concession for eligible commodity traders, with a bill set to be introduced to the Legislative Council in the first half of 2026.\

Green shipping incentives include a tax exemption for green methanol used for bunkering and  the implementation of the Action Plan on Green Maritime Fuel Bunkering to position Hong Kong  as a green maritime fuel bunkering centre.

Global minimum tax

In January 2025, the government submitted a bill to the Legislative Council to implement the global minimum tax proposed by the Organisation for Economic Co-operation and Development, along with the Hong Kong minimum top-up tax. This initiative is designed to address issues related to base erosion and profit shifting. The new policy aims to apply a global minimum tax rate of 15% for large multinational enterprise groups with an annual consolidated revenue of at least EUR 750 million.

HKWJ can assist

Should you have any questions about the implications of the Budget on your company or you as an individual, please feel free to contact us through the form below.

We are also here to assist you on any other tax or corporate related questions you may have.