The Hong Kong Budget 2025-26 was delivered by Financial Secretary, Mr Paul Chan, on 26 February. Hong Kong is grappling with a fiscal deficit as the government aims to cut spending and allocate resources to position Artificial Intelligence (AI) as a key industry to secure long-term development.
Key highlights:
- Tax support measures, including 100% reduction in profits tax capped at HK$1,500
- New “E-commerce Express” to support related business ventures
- HK$1.5 billion to the BUD Fund and Export Marketing and Trade and Industrial Organisation Support Fund to support global expansion
- Changes to immigration policies to draw in skilled workers
- HK$1 billion allocated to set up AI research and development institute
- More support for business activities between Hong Kong and mainland China
In this article, we provide a business summary of the key measures aimed at supporting enterprise growth across industries and prioritising Hong Kong’s investment in innovation, financial services, infrastructure, and business competitiveness.
Supporting businesses in Hong Kong
The Budget introduces tax relief and other initiatives for companies. This includes a new "E-commerce Express" programme for small and medium enterprises (SMEs) and enhanced funding for global expansion.
Tax support measures
The series of tax support measures includes:
- 100% reduction in profits tax for the year of assessment (YA) 2024/25, capped at HK$1,500 per business
- 100% reduction in salaries tax and tax under personal assessment for YA 2024/25, capped at HK$1,500 per taxpayer
- Rates concession of up to HK$500 for domestic and non-domestic properties in the first quarter of 2025/26
These measures may ease the financial pressures on businesses and individuals in the coming assessment years.
For large multinational enterprises, however, there will be a global minimum tax rate of 15% on groups with annual consolidated revenue of at least EUR 750 million, along with the Hong Kong minimum top-up tax. This was announced in last year’s Budget.
New E-commerce Express
For businesses keen to explore opportunities in e-commerce, the Hong Kong Trade Development Council (HKTDC) will introduce the "E-commerce Express" programme in collaboration with major e-commerce platforms. Businesses can explore tailored consultation sessions and thematic seminars via this programme.
Through enhancing its mentorship scheme in cooperation with the Trade and Industry Department, HKTDC will also support SMEs in increasing their e-commerce revenue and accessing the mainland China market.
HK$1.5 billion in funds to support global expansion
Enterprises looking to expand globally can soon benefit from enhanced financial support, as HK$1.5 billion is set to be injected into two ongoing funds:
- Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund): Offering a total cumulative funding amount of HK$7 million for Hong Kong enterprises expanding into mainland China and overseas markets
- Export Marketing and Trade and Industrial Organisation Support Fund: Covering 90% of the total approved project expenditure, or up to HK$5 million, for non-profit-distributing organisations
This Budget measure also hints at streamlined application processes. Further details will be announced by the Commerce and Economic Development Bureau (CEDB).
Increasing Hong Kong’s workforce competitiveness
Hong Kong is strengthening its workforce through enhancements to immigration policies, talent attraction initiatives, and research funding. This year’s Budget unveiled some related measures.
Enhancement to the New Capital Investment Entrant Scheme
Designed to bring asset owners to Hong Kong, the New Capital Investment Entrant Scheme provides opportunities for wealth allocation and investment diversification. With over 880 applications submitted to date, upcoming measures will be introduced to enhance its adaptability and investor benefits.
Changes to immigration policies
Complementing these efforts, Hong Kong offers various immigration pathways, such as the General Employment Policy as well as the Admission Scheme for Mainland Talents and Professionals. These will be enhanced to permit young skilled workers with technical expertise and experience to work in skilled trades, which can support business growth.
To boost government revenue, however, there will be an application fee of HK$600 applied to various talent and capital investor admission schemes. Effective immediately, this will apply to the Top Talent Pass Scheme, Quality Migrant Admission Scheme, and other schemes. Visa fees will vary based on the duration of stay, increasing to either HK$600 or HK$1,300.
Global Talent Summit • Hong Kong
To attract top talent to move here, the Hong Kong Talent Engage (HKTE) will hold its second ‘Global Talent Summit • Hong Kong’ early 2026. This can ensure businesses have access to a wider talent pool when operating here.
HK$1.5 billion Research Matching Grant Scheme
A new round of the Research Matching Grant Scheme, totalling HK$1.5 billion, will be introduced to encourage organisations to support research initiatives at academic institutions. This will strengthen industry-academia collaboration, fostering a highly skilled workforce by equipping talent with cutting-edge research experience and driving innovation-led competitiveness in Hong Kong.
Investing in AI
Committed to establishing AI as a key pillar of its economy, Hong Kong strives to become an international exchange and innovation hub for AI. Budget 2025 reinforces this goal, offering strategic funding, infrastructure, and regulatory support. Local and foreign businesses looking to tap into the AI ecosystem should consider the following opportunities:
Pilot Manufacturing and Production Line Upgrade Support Scheme
At least 400 enterprises can upgrade their production capabilities through the new two-year Pilot Manufacturing and Production Line Upgrade Support Scheme (Manufacturing+) launching this year.
The scheme offers funding of up to HK$250,000 per enterprise on a one-to-two matching basis, designed to help businesses operating production lines in Hong Kong develop smart production strategies and incorporate advanced technologies into existing processes. With a total of HK$100 million allocated to the scheme, businesses can enhance their efficiency and competitiveness in this area.
Dedicated “technology enterprises channel” (TECH)
Specialist technology and biotechnology firms, particularly those with a presence in mainland China, will soon find it easier to secure funding and expand operations. The Hong Kong Exchanges and Clearing Limited (HKEX) is launching a dedicated pathway called TECH to simplify the process of preparing listing applications. Alongside the Securities and Futures Commission (SFC), businesses in this sector can expect a smoother, more efficient route to grow ventures.
New Hong Kong AI Research and Development Institute
A HK$1 billion fund has been earmarked to establish the Hong Kong AI Research and Development Institute, aimed at advancing innovative research and development (R&D) and AI application.
The Institute could potentially provide businesses with the latest AI innovations, funding opportunities, and a collaborative ecosystem to accelerate AI adoption and commercialisation.
First International Conference on Embodied AI Robot
The Hong Kong Investment Corporation Limited (HKIC) will host two major AI events to advance research and industry growth. The International Young Scientist Forum on AI will convene top talent to explore AI development, while the International Conference on Embodied AI Robot will showcase cutting-edge R&D and applications with leading tech firms, investors, and academics, reinforcing Hong Kong’s global influence in AI innovation.
Elevating Hong Kong’s global finance and trade position
This year’s Budget focuses on strengthening and enhancing Hong Kong’s position as a leading global centre for finance and trade, ensuring its continued competitiveness and growth in a rapidly evolving global landscape.
Linkage of faster payment systems between mainland China and Hong Kong
The Hong Kong Monetary Authority (HKMA) and People’s Bank of China (PBoC) are collaborating to provide faster payment systems and enable real-time, small-value cross-border remittance services across both areas. Anticipated to roll out as early as mid-year, these improvements may encourage more businesses to explore and expand in the region with greater confidence.
Improvements to the vetting process for listing
Hong Kong will be updating listing requirements and post-listing obligations to better match current economic trends and corporate needs. This includes enhancing the vetting process by reviewing related regulations, optimising thresholds for both dual primary and secondary listings, and reassessing the market structure. The review may also consider a post-delisting over-the-counter trading mechanism.
Proposed enhancements to the trading unit system
The HKEX and SFC will be assessing the trading unit system, or “board lot” system, following an upcoming decrease in minimum spreads. This review aims to introduce improvements to ensure trading arrangements match the liquidity levels of different types of shares.
These changes are expected to streamline trading processes, improve market efficiency, and create a more adaptable trading environment that aligns with current market dynamics and investor expectations.
Stronger incentives for fund and wealth management
Proposals will be made to revise the tax incentives for funds, single family offices, and carried interest. Among these, this could include extending the "fund" definition under the tax exemption regime and broadening the eligibility of transactions for tax benefits for both funds and single-family offices. This, in turn, could create a tax-efficient environment that increases the attractiveness of setting up investment vehicles in Hong Kong.
First Hong Kong Global Financial and Industry Summit
The first Hong Kong Global Financial and Industry Summit will be held in 2025, hosted by the Financial Services and Treasury Bureau in cooperation with the HKTDC and Office for Attracting Strategic Enterprises (OASES). The event will bring together global enterprises, funds, and technologies and, alongside other major events happening this year, can reinforce Hong Kong's appeal as a place to start and do business.
Support for mainland enterprises entering Hong Kong
For mainland enterprises setting up international or regional headquarters in Hong Kong, one-stop professional consulting services will be provided by the HKTDC and InvestHK to help in building market connections and navigating overseas regulations. The Hong Kong Export Credit Insurance Corporation will also offer credit insurance for export services linked to multinational supply chains.
Strengthening other industries
Hong Kong is future proofing its economy with investments in other key industries such as maritime, aviation, and tourism. Budget 2025 introduces new initiatives to strengthen these sectors.
Innovation and technology (I&T)
Apart from investments specific to AI, Hong Kong is strengthening the wider I&T sector with additional resources:
- New policies for cross-border I&T cooperation: To streamline the cross-border flow of innovative resources. Land allocations will be provided by the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone (Hetao Co-operation Zone) and San Tin Technopole in the Northern Metropolis.
- Promotion support for technology companies by the HKTDC: This will include a new thematic pop-up display area at the Hong Kong Design Gallery, as well as exhibition venues at major events.
Maritime and aviation
Hong Kong is enhancing its maritime and aviation sectors with tax incentives, industry development initiatives, and infrastructure investments:
- Tax incentives for maritime businesses: New tax deduction on ship acquisition costs for ship lessors on operating leases. More information will be released in 2026 pertaining to a proposed half-rate tax concession for eligible commodity traders.
- New Hong Kong Maritime and Port Development Board: To strengthen research, increase promotion, and improve workforce training initiatives for this sector.
- HK$215 million for smart port development: This can streamline data flow among maritime, port, and logistics stakeholders.
- First aircraft parts processing and trading centre in Asia: Facilitated by InvestHK, the Airport Authority (AA) has signed an agreement with a global aeronautic services firm to assess the feasibility of offering aircraft dismantling and other services in Hong Kong.
Tourism and culture
Tourism and cultural events play a significant role in the economy, and Hong Kong will continue promoting its development with:
- HK$1.23 billion to the Hong Kong Tourism Board (HKTB): For supporting international brands as well as hosting of conventions and exhibitions.
- Resources to boost the cruise industry: With aims to increase cruise ship calls and establish Hong Kong as a homeport.
- Support for over 30 cultural intellectual property (IP) projects: To enhance the reach and commercial value of cultural IP products over the next five years.
- Efforts from the OASES: OASES will draw in cultural and creative enterprises that integrate I&T to enrich the local creative industry ecosystem.
- Hong Kong Performing Arts Expo: The second edition will be held in 2026, with an aim for the event to become a flagship for Hong Kong’s arts and cultural industries.
Green development
The Budget introduces tax exemptions for green methanol used for bunkering as well as other upcoming initiatives to support green development in Hong Kong:
- Stronger green technology ecosystem: The Hong Kong Science and Technology Parks Corporation (HKSTPC) is transforming the InnoCentre in Kowloon Tong into the GreenTech Hub. This will bring together over 200 green technology companies.
- HK$300 million subsidy scheme for electric vehicle charging: To boost the development of Hong Kong’s electric vehicle charging network. The scheme is expected to drive the installation of 3,000 fast chargers by 2030.
Next steps
Put together, Budget 2025 demonstrates Hong Kong’s commitment to achieve fiscal stability while fostering new economic drivers. With investments in AI, finance, and other sectors, the measures in the Budget will diversify industry capabilities and open doors to new business opportunities.
For more personalised insights into Budget 2025 and its impact on your expansion plans in Hong Kong, connect with Hawksford today for strategic support. Our local team can help you in entity formation, tax, and other areas of compliance as you expand your presence globally.
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