On February 26, 2025, Hong Kong’s Finance Secretary, Mr. Paul Chan, unveiled the 2025-26 budget. The city’s economy grew moderately by 2.5% in 2024, with a projected 2% to 3% growth for 2025 and an expected average inflation rate of 1.8%. Looking ahead, the economy is forecasted to grow by 2.9% annually in real terms from 2026 to 2029.
Here’s a quick breakdown of the budget’s major proposals
For Businesses
- Corporate Income Tax (Profit Tax): No changes to corporate tax rates. However, there’s a 100% profit tax reduction for the 2024–25 tax year, capped at HKD 1,500 — down from HKD 3,000 in the previous year. This will be reflected in the final tax assessment.
- Artificial Intelligence (AI): AI is recognized as a core industry. The government will review existing tax deductions for intellectual property (IP) expenditures to promote IP-driven industries and IP trading.
- Global Minimum Tax: The bill for implementing a 15% global minimum tax on large multinational corporations was submitted to the Legislative Council in January 2025 and awaits approval.
For Individuals
- Salaries Tax: A 100% reduction in salaries tax and tax under personal assessment for the 2024–25 tax year, capped at HKD 1,500 — down from HKD 3,000 in 2023–24. This will be reflected in the final tax payable.
Other Proposals
- Property Tax Concessions: A rate concession for both residential and non-residential properties (including offices) is proposed for Q1 of the2025–26 tax year, capped at HKD 500 — reduced from HKD 1,000 in 2024.
- Stamp Duty Adjustments: The ad valorem stamp duty rate for property transactions has been revised:
| Property Value (HKD) | Stamp Duty (HKD) |
| Up to 4,000,000 | 100 |
| 4,000,001 – 4,323,780 | 100 + 20% of excess over 4,000,000 |
| 4,323,781 – 4,500,000 | 1.50% |
| 4,500,001 and above | Unchanged |
- Government Spending Cuts: In response to the high deficit in 2024, the budget proposes measures to curb government expenditure, including:
- Freezing salaries for certain public sector employees.
- Reducing the civil service workforce by 2% annually until 2027–28.
- Adjusting transport subsidy schemes to limit benefits.
What This Means for You
Businesses should assess the potential impact of these proposals, including the profit tax reduction, stamp duty changes, property tax concessions, and other sector-specific measures. Staying informed and proactive will be key to navigating these fiscal updates.