Key Tax Measures Proposed Under The 2026-2027 Hong Kong Budget

On 25 February 2026, the Financial Secretary announced the 2026/27 Hong Kong Budget, setting out a wide range of long‑term policy initiatives and short‑term relief measures. Set out below is a snapshot of the key tax measures proposed.

 

STAMP DUTY ON RESIDENTIAL PROPERTY TRANSACTIONS

With effect from 26 February 2026, the ad valorem stamp duty rate for residential property transactions with a value exceeding HK$100 million will increase from 4.25% to 6.5%.

RATES FOR DOMESTIC AND NON-DOMESTIC PROPERTIES

A one-off rates concession will be granted for both domestic and non‑domestic properties for the first two quarters of 2026/27, subject to a ceiling of HK$500 per rateable property.

Salaries tax, tax under personal assessment and profits tax

For the year of assessment 2025/26, a one-off 100% tax reduction for salaries tax, tax under personal assessment and profits tax will be made, subject to a cap of HK$3,000. The reductions are expected to be as follows:

For salaries tax and tax under personal assessment

Assessable Income (HK$)	Average amount of tax reduction (HK$)	Average % of tax reduced
$200,000 and below	$840	100%
$200,001 to $300,000	$2,260	59%
$300,001 to $400,000	$2,530	29%
$400,001 to $600,000	$2,720	14%
$600,001 to $900,000	$2,830	7%
Above $900,000	$2,930	1%

 

For profits tax

Assessable Income (HK$)	Average amount of tax reduction (HK$)	Average % of tax reduced
$100,000 and below	$2,000	52%
$100,001 to $200,000	$3,000	19%
$200,001 to $300,000	$3,000	11%
$300,001 to $400,000	$3,000	8%
$400,001 to $600,000	$3,000	6%
$600,001 to $900,000	$3,000	4%
Above $900,000	$3,000	0.1%

 

FIRST REGISTRATION TAX (FRT) FOR ELECTRIC VEHICLES

Full FRT waiver for electric commercial vehicles, electric motorcycles and electric motor tricycles will continue until end‑March 2028. The current FRT concession for electric private cars will not be extended beyond its expiry at the end of March 2026.

 

INCREASES IN ALLOWANCES AND DEDUCTIONS

The following proposed increases in allowance and deductions are to be implemented from the year of assessment 2026/27 onwards:

a) Basic allowance and single parent allowance: increased from HK$132,000 to HK$145,000

b) Married person’s allowance: increased from HK$264,000 to HK$290,000

c) Child allowance and additional child allowance: increased from HK$130,000 to HK$140,000

d) Dependent parent/grandparent allowance (aged 55–59): increased from HK$25,000 to HK$27,500

e) Dependent parent/grandparent allowance (aged 60 or above): increased from HK$50,000 to HK$55,000

f) Deduction ceiling for elderly residential care expenses: increased from HK$100,000 to HK$110,000

Extending the period of claiming additional child allowance for newborns from one year to two years

Starting from the year of assessment 2026/27, a taxpayer may claim twice the allowance (i.e. $280,000, based on the proposed child allowance of $140,000) for each child in the first two years following childbirth. This measure is applicable to all children under the age of two by the end of the year of assessment (i.e. all children born on or after 1 April 2025).

 

OTHER REVIEWS AND AMENDMENTS

Research and Development (R&D) expenditures

Tax arrangements for R&D expenditures will be reviewed and enhanced to strengthen scientific collaboration, technology transfer and the development of emerging and future industries between Hong Kong and the Greater Bay Area.

Enhanced tax measures

An amendment bill will be introduced this year to enhance various tax regimes:

a) To attract more family offices and funds by expanding the scope of “fund” to cover specific funds‑of‑one and by classifying digital assets, precious metals and specified commodities as qualifying investments eligible for tax concessions.

b) To promote real estate investment trusts (REIT) development by providing stamp duty waiver for the transfer of non‑residential properties into REITs seeking to list.

c) To facilitate internal restructuring by enterprises by relaxing the criteria for stamp duty relief for intra‑group transfers of assets.

The preliminary proposed measures are as follows:

• expanding the scope of eligible entities to include bodies corporate that do not issue or allot share capital, such as limited liability partnerships which has separate legal personality; and
• lowering the minimum threshold for association between the transferor and the transferee from 90% to 75%.

The enhanced intra-group relief regime will apply to the relevant instruments executed on or after 25 February 2026.

d) To attract enterprises to set up in Hong Kong by offering preferential tax rates of half‑rate or 5%.

e) To promote high value‑added maritime services by providing a half‑rate tax concession to eligible commodities traders.

f) To facilitate intellectual property (IP) trading by providing tax reduction measures for capital expenditure incurred for purchasing IP or the rights to use IP.

Corporate Treasury Centres (CTCs)

A series of enhancement measures will be announced in the middle of 2026, including additional tax incentives and flexibility to CTCs and their associated companies, and the introduction of a pre-approval mechanism.

Crypto-Asset Reporting Framework

Amendments to the Inland Revenue Ordinance will be made over the next two years to implement (i) the Crypto-Asset Reporting Framework and (ii) the amended Common Reporting Standard issued by the Organisation for Economic Co-operation and Development (OECD).

Gold trading

Following the co‑operation agreement with the Shanghai Gold Exchange and the establishment of a central gold clearing system in Hong Kong, tax incentives for eligible institutions conducting gold trading and settlement in Hong Kong will be explored.

 

Legislative changes are expected to be implemented within the year to give effect to the proposed measures. Hong Kong taxpayers are advised to stay apprised of further announcements from the Government and to consult their tax advisers to consider any potential tax planning opportunities as additional details of the initiatives emerge. We will continue to monitor developments closely and provide updates as and when material information becomes available.