Key Tax Measures Proposed Under The 2025-2026 Hong Kong Budget
On 26 February 2025, the Financial Secretary announced the 2025/26 budget (Budget). The Budget covers a wide range of initiatives, both long term policies and short term measures.
To give you a snapshot on the key tax initiatives, we set out below some significant tax measures proposed under the Budget.
One-off reduction of salaries tax, tax under personal assessment and profits tax
For the year of assessment 2024/25, a one-off 100% tax reduction for salaries tax, tax under personal assessment and profits tax will be made subject to a cap of HKD1,500. The reductions are expected to be as follows:
For salaries tax and tax under personal assessment
| Assessable Income (HKD) | Average amount of tax reduction (HKD) | Average % of tax reduced |
| 200,000 and below | 700 | 90% |
| 200,001 to 300,000 | 1,290 | 32% |
| 300,001 to 400,000 | 1,350 | 15% |
| 300,001 to 400,000 | 1,390 | 7% |
| 600,001 to 900,000 | 1,440 | 3% |
| Above 900,000 | 1,460 | 1% |
For profits tax
| Assessable Profits (HKD) | Average amount of tax reduction (HKD) | Average % of tax reduced |
| 100,000 and below | 1,160 | 28% |
| 100,001 to 200,000 | 1,500 | 9% |
| 200,001 to 300,000 | 1,500 | 6% |
| 300,001 to 400,000 | 1,500 | 4% |
| 400,001 to 600,000 | 1,500 | 3% |
| 600,001 to 900,000 | 1,500 | 2% |
| Above 900,000 | 1,500 | 0.05% |
Rates for domestic and non-domestic properties
A rates waiver for each domestic rateable property, and a rates concession for each non-domestic rateable property will be provided for the first quarter of 2025/26, subject to a ceiling of HKD500 each.
Stamp duty
The ad valorem stamp-duty rate for residential and non-residential property transactions executed on or after 26 February 2025 has been adjusted. One notable change is that the maximum value of properties chargeable to an HKD 100 stamp duty has been raised from HKD 3 million to HKD 4 million. Details of the new stamp duty rates are as follows:
| Amount or value of consideration (whichever is higher) (HKD) | Rates |
| Up to 4,000,000 | HKD100 |
| 4,000,001 to 4,500,000 | 1.5% |
| 4,500,001 to 6,000,000 | 2.25% |
| 6,000,001 to 9,000,00 | 3.00% |
| 9,000,001 to 20,000,000 | 3.75% |
| 20,000,001 and above | 4.25% |
Introduction of global minimum tax
A bill on the implementation of the Global Minimum Tax proposal (15%) under the Organisation for Economic Co-operation and Development (OECD) framework for multinational enterprise groups with a consolidated annual revenue of at least EUR750 million was submitted to Legislative Council in January 2025. This is to address base erosion and profit shifting.
Increase of air passenger departure tax
The rate of air passenger departure tax will be increased from HKD 120 to HKD 200 per passenger starting from the third quarter of 2025/26.
Proposals on preferential tax regimes for funds, single family offices and carried interest
New proposals regarding preferential tax regimes for funds, single family offices and carried interests will be formulated, such as expanding the scope of "fund" under the tax exemption regime and enhancing tax concession arrangements on the distribution of carried interests by private equity funds, to strengthen Hong Kong’s position as a major international financial centre.
Introduction of tax measures for the maritime industry
There will be new proposals to enhance the ship leasing regime in response to changes in the international tax standards, including tax deductions on ship acquisition costs for ship lessors under operating leases. Additionally, there are plans to introduce half-rate tax concessions for eligible commodity traders. These proposals are expected to be presented as a bill to the Legislative Council in the first half of next year.
Furthermore, to promote green shipping, tax exemptions will be provided for green methanol used for bunkering.
Review of the tax deduction arrangement for intellectual property usage rights
To accelerate the development of intellectual property intensive industries and promote intellectual property trading, there will be a review of tax deduction arrangements for various expenditures, including lump sum licensing fees for acquiring intellectual property rights or rights to use such rights and related expenses incurred for acquiring intellectual property rights or rights to use such rights from associates.
Negotiation on double taxation agreements
Negotiations are being conducted with seventeen countries on Comprehensive Avoidance of Double Taxation Agreements.
Legislative changes are anticipated to be implemented this year to align with the proposed measures. Taxpayers in Hong Kong should stay informed about updates from the government and reach out to their tax representatives for tax planning as more information about the initiatives becomes available. We will keep an eye on these developments and share any key updates once available.
