On 25 February, Financial Secretary Paul Chan presented Hong Kong's new Budget for the 2026-27 financial year. The Budget aims to keep the economy growing, build long-term strength for the future, and help Hong Kong take advantage of new opportunities in technology and global finance.
Hong Kong's economy grew by 3.5% in 2025. This was the third year in a row that the economy expanded. The main reasons for this growth were strong trade with other countries and a recovery in local spending (people and businesses started spending more again). Looking ahead, the government expects the economy to grow by between 2.5% and 3.5% in the coming year. At the same time, the inflation rate which measures how much prices rise is expected to stay below 2%, which means the cost of living should remain fairly stable.
According to Paul Chan, a strong economy and a busy stock market brought in more tax revenue than expected. Despite this good news, the government still needs to bring in additional money to pay for new projects and investments outlined in the Budget. Here are the main ways it plans to do that:
Higher stamp duty on very expensive homes: For residential properties worth more than HKD 100 million (about EUR 11.1 million), the stamp duty rate will go up from 4.25% to 6.5%. This mainly affects luxury homes and very wealthy buyers.
Global minimum tax for large companies: Hong Kong will continue to apply the OECD Pillar Two Global Minimum Tax. This rule has been in place for financial years starting on or after 1 January 2025. Under this rule, large multinational companies with yearly revenue of at least €750 million must pay extra tax if their effective tax rate is below 15%. Chan expects this to bring in an additional HKD 15 billion (about EUR 1.6 billion) each year starting from the 2027-28 financial year.
The Budget focuses most of its new spending on three big areas: innovation, artificial intelligence (AI), and financial services. Below are the key plans for each area.
1. Asset and Wealth Management
Hong Kong already has more than 3,300 single-family offices (businesses that manage one wealthy family's money). The government wants to increase this number. To do so, it will introduce a new law in the first half of this year to improve the tax system for funds and family offices. The government will expand the definition of 'fund' to include certain funds-of-one (funds with only one investor). It will also classify digital assets, precious metals, and some other goods as qualifying investments, meaning they can receive tax concessions. In addition, the government will make it legal to privatise Real Estate Investment Trusts (REITs) and will change the law next year to remove stamp duty when moving non-residential properties into REITs that want to be listed.
2. Corporate Treasury Centres (CTCs)
A Corporate Treasury Centre is a department within a large company that manages its money, including cash, investments, and risks. To attract more companies to set up CTCs in Hong Kong, the government will make it easier to get stamp duty relief when moving assets between companies in the same group. This change will apply to documents signed from Budget day onward.
3. Company Re-domiciliation
Since this scheme started in 2025, 22 companies have been approved to move their legal home to Hong Kong, and another 20 applications are still being processed. The government will increase publicity about this scheme to attract even more companies to set up in Hong Kong.
4. Development of Digital Assets
CMU OmniClear is the organisation that runs Hong Kong's central securities depository for bonds and other fixed-income products. This year, it will build a digital asset platform to support the issuance and settlement of digital bonds (bonds that exist on a blockchain). The government will also introduce a new law this year to create licensing systems for digital asset dealers and custodian service providers (companies that safely hold digital assets for customers).
5. Intellectual Property (IP) Trading
Intellectual property includes things like patents, trademarks, and copyrights. The government will propose a law this year to allow companies to get tax deductions for money they spend on buying IP. It will also invest HKD 28 million (about EUR 3.1 million) in the Hong Kong Technology & Innovation Support Centre to help with patent evaluation, and it will run a two-year pilot Patent Valuation Support Scheme (to help companies understand how much their patents are worth). In addition, the government will invest HKD 52 million (about EUR 5.7 million) in a two-year pilot programme for the Intellectual Property Academy.
6. Trade Centre
To strengthen Hong Kong's position as a trade hub, the government will propose a law this year that offers special benefits to trading companies. These benefits include preferential arrangements on land grants, financial subsidies, and tax incentives (with tax rates at half the normal rate or as low as 5%). The government will also set up an Advisory Committee on Tax Policy and create a cross-sector professional services platform. Finally, the government will invest HKD 100 million (about EUR 11.1 million) to attract large, international exhibitions with new and exciting elements.
7. Mutual Market Access
Mutual market access means investors in Hong Kong and Mainland China can invest in each other's markets more easily. The government will speed up the launch of Chinese government bond futures in Hong Kong. It will also work to include Real Estate Investment Trusts (REITs) in the mutual access system and to include the RMB trading counter under Southbound Stock Connect (which allows Mainland investors to buy Hong Kong stocks).
8. Driving AI+ Development
The Hong Kong AI Research & Development Institute will start operating in the second half of this year. Its job will be to support research and development and to help turn research results into real products that businesses can use.
9. Support for Small and Medium-Sized Enterprises (SMEs)
Small businesses are very important to Hong Kong's economy. To help them, the government will add another HKD 200 million (about EUR 22.2 million) to the BUD Fund (a fund that helps with branding, upgrading, and domestic sales). This will help Hong Kong companies take advantage of opportunities in Mainland China and ASEAN countries. In addition, the government will add HKD 20 billion (about EUR 2.2 billion) to the SME Financing Guarantee Scheme (which helps small businesses get bank loans) and will extend the application period for the 80% Guarantee Product until the end of March 2028.
10. Aviation, Shipping and Logistics
This year, the government will launch a Future Innovative Logistics Acceleration Scheme to improve how logistics data is shared between different companies and systems. The government will also introduce a new law to improve tax breaks for the maritime services industry. It will offer a half-rate tax concession to eligible commodities traders (people or companies that trade raw materials like oil, grain, or metals).
11. Supporting Emerging Industries
The government will set up a new HKD 10 billion (about EUR 1.1 billion) I&T Industry-Oriented Fund. This fund will begin operating this year and will help direct money from private investors into strategic and emerging industries. These include life and health technology, AI and robotics, and future industries. The government will also review and improve tax arrangements for research and development (R&D) spending, push for more R&D and real-world applications in embodied AI, quantum technology, and new materials, and ask the Office for Attracting Strategic Enterprises (OASES) to attract aerospace companies. Finally, Hong Kong Investment Corporation (HKIC) will work with private companies to establish the Hong Kong RISC-V Alliance, which will bring together industry, universities, and investors to work on microelectronics.
12. Gold Trading
The government will explore offering tax concessions to eligible organisations that conduct gold trading and settlement in Hong Kong.
13. New Industrialisation
The government will launch a New Industrialisation Elite Enterprises Nurturing Scheme this year to support high-growth industrial companies. It will also allocate HKD 220 million (about EUR 24.4 million) to establish the first national manufacturing innovation centre located outside the Mainland.
14. Northern Metropolis for I&T
The Northern Metropolis is a very large development project in the northern part of Hong Kong, close to the Mainland border. The government will set aside HKD 10 billion each for three parts of this project: the Hetao Hong Kong Park, the San Tin Technopole, and the Hung Shui Kiu Industrial Park. The government will work together with property developers and technology companies to speed up this megaproject.
Paul Chan announced that for the first time ever, Hong Kong will create its own local five-year plan. This is an important step because it means Hong Kong's future development will fit more closely with the country's main policy goals. In the coming years, Hong Kong will work to align its economy and plans with national priorities while still keeping its own unique strengths as an international financial centre.
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