Hong Kong's 2025-26 Budget Announced
On 26 February 2025, Chan Mo-po, the Financial Secretary of the Hong Kong Special Administrative Region, delivered the 2025-26 Budget.
The Budget for the upcoming year is designed to address the fiscal deficits and economic challenges that have emerged in recent years. In light of the uncertainties in the global economy, geopolitical instability, and elevated global interest rates, the Hong Kong Government has announced a series of relief measures. These measures include reductions in public expenditure, the promotion of scientific and technological innovation, and the enhancement of infrastructure development, all aimed at fostering economic growth and maintaining fiscal prudence. The key initiatives are outlined as follows:
Relieving People's Hardship
- Reduce salaries tax and tax under personal assessment for the year of assessment 2024/25 by 100%, subject to a ceiling of HK$1,500 (you're welcomed to use Conpak's HK Salaries Tax Calculator to quickly calculate salaries tax and property tax)
- Provide rates concession for domestic properties for the first quarter of 2025/26, subject to a ceiling of HK$500 for each rateable property
- Provide an allowance to eligible social security recipients, equal to one half of a month of the standard rate of 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
- Residential properties: maximum value of properties chargeable to a stamp duty of HK$100 will be raised from HK$3 million to HK$4 million with immediate effect
- The Labour Department has relaxed the requirements of joining the GBA Youth Employment Scheme to young people aged 29 or below with sub-degree or higher qualifications, and increased the limit of allowance for enterprises to HK$12,000 per month per person for up to 18 months
Supporting Enterprises
- Reduce profits tax for the year of assessment 2024/25 by 100%, subject to a ceiling of HK$1,500
- Provide rates concession for non-domestic properties for the first quarter of 2025/26, subject to a ceiling of HK$500 for each rateable property
- Non-residential properties: maximum value of properties chargeable to a stamp duty of HK$100 will be raised from HK$3 million to HK$4 million with immediate effect
- Inject HK$1.5 billion in total into the Dedicated Fund on Branding, Upgrading and Domestic Sales and the Export Marketing and Trade and Industrial Organisation Support Fund, and streamline application arrangements
- SME Financing Guarantee Scheme: relaunched the principal moratorium arrangement in November 2024 for one year, allowing enterprises to apply for principal moratorium for up to 12 months
- Taskforce on SME Lending: the funds dedicated for SME financing in the participating banks' loan portfolios have recently been increased to over HK$390 billion
- To further assist local SMEs in tapping into the Mainland market and increasing sales from electronic commerce (ecommerce) markets, the Hong Kong Trade and Development Council (HKTDC) will launch the "E-Commerce Express". In addition, HKTDC will organise the second edition of the Hong Kong Shopping Festival
- Pilot Manufacturing and Production Line Upgrade Support Scheme: the Government earmarked HK$100 million for the Scheme and it will provide funding of up to HK$250,000 each on a one-to-two matching basis to enterprises operating production lines in Hong Kong to support their formulation of smart production strategies and introduction of advanced technologies into existing production lines
The current Budget has put forth several initiatives aimed at addressing the fiscal deficits and economic challenges, which encompass the reduction of public expenditure, the optimization and streamlining of public services, the promotion of scientific and technological innovation, the enhancement of infrastructure investments, and a review of the listing requirements in Hong Kong, including the optimization of dual primary and secondary listing criteria.
In addition, leveraging the distinctive benefits of "One Country, Two Systems," the Hong Kong Government will persist in its efforts to substantially increase economic capacity and strengthen competitiveness. This will involve fostering technological innovation, developing new models, and refining talent cultivation and recruitment, while advancing the cohesive growth of education, technology, and talent.
The advancement of the " Northern Metropolis" initiative is intended to bolster interactions with cities in the Greater Bay Area. We are of the opinion that these policies may help mitigate fiscal challenges in the short run while also setting the stage for enduring economic expansion. On the other hand, the effective implementation of policies must take into account market reactions, the global economic environment, and the local society's capacity to withstand changes. The Government needs to strike a balance between promoting economic development and maintaining fiscal prudence to ensure the sustainable growth of Hong Kong's economy.
