Hong Kong’s Financial Secretary Paul Chan has unveiled the 2026-27 budget, signaling a shift from deficit to surplus with a HK$2.9 billion surplus. The budget introduces significant tax relief measures for individuals and businesses, alongside substantial investments in key industries and development projects. This financial blueprint aims to alleviate economic pressures while fostering long-term growth and maintaining fiscal prudence.
The budget offers a welcome respite for Hong Kong’s taxpayers and businesses. For the 2025-26 assessment year, individuals will receive a maximum HK$3,000 reduction in salaries tax, a doubling of the previous year’s concession. Similarly, businesses will benefit from a profits tax reduction of up to HK$3,000. These measures are designed to ease the economic burden on citizens and enterprises. Around 2.12 million taxpayers and 171,000 businesses are expected to benefit from these tax cuts.
Beyond immediate relief, the budget outlines a forward-looking strategy with significant investments in emerging sectors. Key areas of focus include artificial intelligence (AI), intellectual property (IP), and the aerospace industry. The government plans to strategically utilize income from the Exchange Fund to finance major development projects, particularly in the Northern Metropolis. These initiatives underscore Hong Kong’s commitment to strengthening its position as a global financial hub and an innovation powerhouse.
To further stimulate the economy, the budget includes measures to boost tourism. Additionally, property owners will see relief through capped rates concessions. Domestic and non-domestic properties will receive concessions capped at HK$500 each for the first two quarters of the 2026-27 financial year. Recipients of social security schemes, such as the Comprehensive Social Security Assistance and Old Age Allowance, will also receive an additional month’s payment, providing further support to vulnerable groups.
Despite the increased spending on relief and investment, Financial Secretary Paul Chan emphasized the importance of prudent financial management. A 2% cap on recurrent expenditure for the upcoming two financial years has been implemented. The government anticipates continued surpluses in the coming years, aiming to maintain adequate reserves to navigate potential geopolitical challenges and support sustainable long-term growth.