Hong Kong Budget 2026-27

On 25 February 2026, Hong Kong’s Financial Secretary, Mr CHAN, Paul Mo po, presented the Budget for the 2026–27 financial year. The theme, “Driving High quality, Inclusive Growth with Innovation and Finance”, reflects a clear shift from short term stabilisation measures towards long term strategic development. This year’s Budget outlines a vision centred on enhancing Hong Kong’s competitive position, advancing innovation and technology, reinforcing financial strengths, and maintaining a disciplined and sustainable fiscal approach. It also reaffirms the Government’s commitment to fostering social inclusion, resilience, and environmental responsibility.

Economic and Fiscal Outlook

Early Return to Fiscal Surplus

A major highlight of this year’s Budget is the early return to fiscal surplus. Higher than expected revenues, particularly from stamp duties and profits tax, combined with prudent expenditure management, have enabled the Operating Account to move back into surplus earlier than previously forecast. The revised estimate for the 2025–26 financial year indicates a surplus of approximately HKD2.9 billion, compared with an original projection of a deficit of HKD67 billion. This marks a significant turning point following several years of pandemic driven fiscal deficits.

The improvement is largely attributed to strengthened financial market activity, an uplift in investment sentiment, and stable local economic conditions. The upward revision of stamp duty revenue to almost HKD100 billion demonstrates the resilience of Hong Kong’s financial markets and the continued confidence of local and international investors. This renewed fiscal capacity affords the Government room to pursue targeted investments and structural reforms that support future growth, rather than relying on broad and temporary relief measures.

Fiscal Reserves

Hong Kong’s fiscal reserves remain substantial, with an expected figure of HKD657.2 billion by 
31 March 2026. Although reserves have declined from historic peaks due to exceptional public health and economic support measures in recent years, the current trajectory suggests renewed stability. The financial buffer remains adequate to safeguard against economic volatility, support long term planning, and preserve public confidence in the city’s financial foundations.

Economic Environment and Outlook

The economy experienced stronger than expected performance in 2025. Improved capital market conditions, a more positive global environment, and growing interest in technology driven sectors contributed to renewed economic momentum. Investor enthusiasm around artificial intelligence and digital transformation supported business confidence and created new opportunities for growth.

Looking forward, the Government anticipates continued economic expansion in 2026. Hong Kong’s increasing integration with the Greater Bay Area is expected to drive new cross border investment flows, deeper market connectivity, enhanced innovation capabilities, and wider employment opportunities across emerging industries. Hong Kong’s role as a bridge between Mainland China and the international market remains central to its economic outlook, underpinning sustained growth in both capital flows and commercial activity.

Policy Priorities and Strategic Direction

Alignment with National Development Priorities

The launch of China’s 15th Five Year Plan sets the broader strategic context for this year’s Budget. The Government places strong emphasis on aligning Hong Kong’s growth with national objectives, particularly in innovation, high end manufacturing, financial development, and technology driven transformation. The Budget highlights the city’s unique position as a super connector, noting the importance of deepening Mainland collaboration while sustaining international openness and competitiveness.

Innovation, Technology, and New Industrialisation

The Budget outlines a comprehensive agenda to accelerate Hong Kong’s transformation into an international innovation and technology hub. Priority initiatives include:

• Substantial expansion of artificial intelligence adoption across government departments and local industries to enhance efficiency and service delivery.

• Strengthening cross border research and development partnerships within the Greater Bay Area, supported by enhanced tax deductions and improved collaboration channels.

• Driving new industrialisation by promoting advanced manufacturing, biotechnology, life and health sciences, and other high value emerging sectors.

• Encouraging long term investment through patient capital schemes designed to nurture growth stage enterprises and strategic technologies.

The overarching goal is to diversify Hong Kong’s economic structure, stimulate high value job creation, and foster a vibrant ecosystem for technology driven development.

Strengthening Hong Kong as an International Financial Centre

Hong Kong’s status as a leading global financial centre remains a cornerstone of the Government’s economic strategy. To reinforce this position, the Budget introduces several key enhancements, many of which directly benefit the wealth management and corporate services sectors:

• Broader tax concessions for funds and family offices, including an expanded definition of eligible investment classes to cover digital assets, precious metals, and specified commodities. This will support the establishment and expansion of family offices, funds of one, and private investment vehicles. 

• Further development of the digital asset sector, including refinements to regulatory frameworks to improve transparency and operational certainty, and support for the continued rollout of tokenised financial products and digital bond infrastructure. 

• Enhanced incentives for corporate treasury centres (CTCs), featuring additional tax benefits, improved certainty through pre-approval mechanisms, and greater flexibility for intra group financing and treasury operations. These measures are designed to attract multinational corporations to centralise liquidity and financing activities in Hong Kong. 

• Strategic tax incentives for selected high value sectors, including proposals for half rate profits tax or effective tax rates as low as 5 per cent for qualifying activities. 

• Strengthening of market infrastructure and risk management frameworks to maintain resilience, stability, and international confidence.

Collectively, these measures aim to deepen Hong Kong’s financial markets, attract global capital, and ensure continued leadership in asset and wealth management.

Northern Metropolis and Infrastructure Development

The Budget reinforces the strategic importance of the Northern Metropolis, one of Hong Kong’s largest long term development initiatives. The area is intended to evolve into a world class innovation and technology zone that will strengthen economic integration with Shenzhen, provide housing and employment opportunities, and support broader regional development.

To accelerate progress, the Government has committed significant funding, including a landmark HKD150billion transfer from the Exchange Fund over two years. Beyond the Northern Metropolis, overall public infrastructure spending is set to remain on an upward trajectory. Major allocations include enhancements to transport networks, land development projects, and key community facilities, reflecting the Government’s sustained commitment to long term economic transformation and urban renewal.

Tax Relief and Adjustments

Individuals

The Budget introduces targeted tax relief measures designed to provide modest support to residents without undermining fiscal discipline.

For the 2025–26 assessment year:

• Individuals will benefit from a 100 per cent reduction in salaries tax and personal assessment tax, capped at HKD3,000.

From 2026–27 onwards, several allowances will be increased:

• Higher basic and single parent allowances

• Increased married person’s allowance

• Higher child allowance for each eligible dependent

• Increased allowances for dependent parents and grandparents

• Higher deduction limits for elderly residential care expenditure

These adjustments reflect cost of living pressures and support the Government’s objective to maintain a competitive, fair, and progressive tax regime.

Businesses

Businesses will also benefit from a 100 per cent profits tax reduction, capped at HKD3,000, for the 2025–26 assessment year. Additional legislative refinements will streamline compliance for corporate treasury centres and enhance flexibility for multinational enterprises managing intra group asset transfers or financial operations.

The measures collectively aim to nurture a favourable business environment, support small and medium sized enterprises, and encourage global and regional companies to expand their operations in Hong Kong. The introduction of the global minimum tax and a corresponding Hong Kong minimum top up tax from 2027–28 is expected to broaden the revenue base and strengthen tax competitiveness.

Property, Rates, and Stamp Duty

Stamp Duty on High Value Properties

To maintain a stable revenue base and ensure the equitable allocation of public resources, the Government has adjusted the stamp duty rates applicable to high value residential property transactions. Properties valued above HKD100 million will now attract a higher rate of 6.5 per cent, compared with the previous 4.25 per cent. This adjustment affects only a small portion of the market and is not expected to influence broader housing trends.

Rates Concessions

The Government will continue to provide rates concessions for both domestic and non-domestic properties during the first two quarters of the 2026–27 financial year. Each rateable property will receive a concession capped at HKD500 per quarter. This measure provides modest relief to households and enterprises while maintaining the Government’s overall fiscal discipline.

Community, Social, and Welfare Measures

This year’s Budget reaffirms the Government’s dedication to building a caring, inclusive, and resilient society. Key measures include:

• Enhanced support for elderly care services, including improved access to community and residential care.

• Expanded youth development programmes focused on education, training, and upward mobility.

• Initiatives aimed at supporting women’s development and increasing workforce participation.

• Strengthened support for persons with disabilities, including improvements to service provision and accessibility.

• Continued investment in public healthcare, with emphasis on infrastructure, workforce development, and service enhancement.

The Budget also allocates resources to support communities affected by major incidents, demonstrating the Government’s commitment to safeguarding social stability and community well-being.

Green Transformation and Sustainability

The transition towards a green and sustainable economy remains a central priority within the Government’s long term policy agenda. The Budget outlines ongoing initiatives in:

• Green finance, including measures to attract domestic and international investors to green and sustainable financial products.

• Green technology development, particularly in areas such as energy efficiency, waste reduction, and carbon management.

• Urban sustainability, with a focus on smart city enhancements and environmentally responsible urban planning.

• Progress towards Hong Kong’s dual carbon targets, emphasising carbon reduction, energy transition, and long-term environmental stewardship.

These initiatives aim to position Hong Kong as a leading regional centre for green finance and innovation while supporting the city’s wider climate commitments.

Conclusion

The Hong Kong Budget 2026–27 represents a forward looking and strategically aligned plan that aims to reinforce the city’s competitive position while maintaining fiscal prudence. With an early return to surplus and improved economic momentum, the Government is well placed to advance targeted investments in technology, finance, infrastructure, and sustainability.

At the same time, the Budget prioritises social inclusion and community support, recognising the importance of building a resilient and cohesive society. As Hong Kong enters a new stage of development closely aligned with national priorities and global trends, the measures outlined in this Budget provide a comprehensive and balanced framework for high quality, inclusive, and sustainable growth in the years ahead.

Source and Release Information

The Hong Kong Budget 2026–27 was officially released by the Government of the Hong Kong Special Administrative Region on 25 February 2026. The full Budget materials, including the speech, appendices, and related documents, are available on the Government’s Budget website:

Source: 
Government of the Hong Kong SAR
Hong Kong Budget 2026–27
https://www.budget.gov.hk/2026/eng/index.html