On 25 February 2026, Financial Secretary Paul Chan Mo-po delivered Hong Kong's Budget for the 2026–27 fiscal year — a blueprint that marks a turning point after three consecutive years of deficits. Buoyed by a resurgent stock market and stronger-than-expected government revenues, the city has returned to an operating surplus ahead of schedule. Rather than distributing windfall benefits, the government has opted for a measured, forward-looking strategy: investing in technology, reinforcing Hong Kong's role as an international financial centre, and laying the groundwork for sustained long-term growth in alignment with China's 15th Five-Year Plan.

At Sinda Corporation, we have analysed the key provisions of this Budget and set out below the most significant developments for businesses, investors, and individuals operating in or with Hong Kong.

1. A Return to Surplus — And Fiscal Discipline After three years of fiscal deficits that tested Hong Kong's financial resilience, the operating account has returned to surplus in the 2025–26 financial year. This improvement was driven primarily by gains in the stock market, which boosted stamp duty and related revenues. The government's fiscal reserves remain substantial at approximately HK$654 billion, providing a meaningful buffer against geopolitical and economic shocks. Despite the improved fiscal position, the Financial Secretary resisted calls for large-scale relief handouts and instead channelled resources toward targeted investments and structural reforms. For 2027 to 2030, the government projects average annual GDP growth of 3% — notably higher than the 2.4% average over the past two decades. This upgraded outlook reflects confidence in Hong Kong's economic trajectory, particularly as it deepens integration with the Greater Bay Area and embraces new growth sectors.

2. Tax Relief for Individuals and Businesses While the government avoided broad fiscal stimulus, it did introduce targeted relief measures for both individuals and companies. For individuals, the key measures include: A 100% reduction in salaries tax and personal assessment tax for the assessment year 2025–26, subject to a ceiling of HK$3,000 per taxpayer. An increase in the basic allowance and single parent allowance from HK$132,000 to HK$145,000. The married person's allowance is raised from HK$264,000 to HK$290,000. Rates concessions of up to HK$500 per quarter for both domestic and non-domestic properties for the first two quarters of 2026–27.

For businesses: A 100% reduction in profits tax for the 2025–26 assessment year, subject to a HK$3,000 ceiling. New incentives for corporate treasury centres, including relaxed stamp duty criteria for intra-group asset transfers, effective immediately from 25 February 2026. A half-rate profits tax concession for eligible commodities traders, bolstering Hong Kong's position as a regional commodities hub.

3. Innovation, Technology & Artificial Intelligence The Budget places innovation and technology (I&T) at the centre of Hong Kong's economic transformation strategy. The government has committed to significant investment in artificial intelligence, semiconductors, and related digital infrastructure. Headline measures in this area include accelerated funding for an innovation hub being developed near the border with Shenzhen — closely linked to the broader Northern Metropolis project. The government also announced that it will promote AI adoption across both the public and private sectors, and will expand the use of electric vehicles and drone technology as part of its smart city and logistics agenda. Hong Kong's CMU OmniClear platform is to establish a new digital asset infrastructure during the year, designed to support the issuance and settlement of digital bonds. This signals growing regulatory and institutional confidence in Hong Kong's digital asset ecosystem, a sector that has seen significant global interest in recent years.

4. The Northern Metropolis — A Cross-Border Growth Engine The acceleration of the Northern Metropolis (NM) development project stands out as one of the Budget's most strategically significant commitments. This large-scale, cross-border initiative — positioned adjacent to Shenzhen — is intended to become a major technology and innovation hub, attracting both domestic enterprises and international firms seeking access to the Greater Bay Area. The government has committed to providing a special policy package for key enterprises locating in the Northern Metropolis, including tax incentives and talent-matching programmes. Accelerated tax depreciation for fixed assets used within the Northern Metropolis is also proposed, making it financially attractive for companies to invest in plant, equipment, and infrastructure there. The Northern Metropolis is more than a real estate development — it represents Hong Kong's strategic ambition to integrate more deeply with the mainland economy while retaining its distinct legal, regulatory, and financial frameworks. For businesses considering regional expansion, this area deserves close attention.

5. Financial Services — Strengthening the International Centre Hong Kong's status as a leading global financial centre remains a core pillar of the Budget. Several targeted measures are aimed at deepening the city's capital markets, attracting wealth management activity, and reinforcing its role as a conduit for cross-border capital flows.

Key financial sector measures include: Legislation to be introduced this year to enhance the tax-concession regime for family offices and investment funds, including enabling REITs privatisation. This positions Hong Kong to compete more aggressively with Singapore for ultra-high-net-worth family office mandates.

A stamp duty waiver for transferring non-residential properties into REITs seeking to list — a measure designed to stimulate the domestic REIT market and attract yield-seeking institutional capital.

A study into the establishment of a one-stop, multi-asset class post-trade securities infrastructure covering both Hong Kong and mainland equity and debt securities. Exploration of tax concessions for eligible institutions conducting gold trading and settlement in Hong Kong, a niche but strategically important market for diversifying Hong Kong's financial product range. Fast-tracking of pension reforms and promotion of yuan-denominated bond issuances, reinforcing Hong Kong's role in the internationalisation of the renminbi.

6. Property Market — Luxury Stamp Duty Hike The Budget introduced one notable tightening measure in the property sector: an increase in the stamp duty rate for residential properties valued above HK$100 million. The rate has been adjusted from 4.25% to 6.5%, with retrospective effect from 26 February 2026. This targeted hike applies exclusively to the ultra-luxury segment of the market and is unlikely to have a material impact on the broader residential market, which has been in the process of gradual recovery. However, for developers and investors active in the prime residential segment, particularly in prime districts, this represents a meaningful change in transaction costs. Separately, the government announced it would detail its funding plan for the HK$6.8 billion buyout of fire-affected Wang Fuk Court flats — a significant public housing commitment that underscores the administration's continued focus on housing supply and affordability.

7. Global Tax Compliance — BEPS 2.0 Implementation Hong Kong is proceeding with the implementation of the OECD's BEPS 2.0 framework, which will impose a global minimum tax of 15% on large multinational enterprise groups with annual consolidated revenues of EUR 750 million or more. A Hong Kong minimum top-up tax will apply to bring the effective tax rate of in-scope multinationals up to the global minimum where their Hong Kong operations are currently taxed below that threshold. This is a significant development for multinationals with regional headquarters or treasury functions in Hong Kong that have historically benefited from low effective tax rates. Companies in scope should review their structures and consult with advisors to understand the full implications. The government has indicated it will announce enhancement measures for corporate treasury centres — including additional tax incentives — to ensure Hong Kong remains competitive under the new global framework.

8. Hong Kong's First Five-Year Economic Blueprint In a landmark move, the Budget unveiled Hong Kong's first-ever five-year economic plan, a blueprint that closely parallels China's own national five-year planning cycle. This signals a more structured and strategic approach to economic development, providing businesses and investors with clearer long-term signals about the government's priorities. The plan consolidates Hong Kong's strategic roles as an international financial centre, a shipping and trade hub, an innovation and technology centre, and a gateway to the mainland. These are not new ambitions — but formalising them in a five-year framework provides a new level of policy continuity and planning horizon that international businesses will likely welcome.

9. What This Means for Business The 2026–27 Budget is, at its core, a growth-oriented budget that prioritises strategic investment over short-term relief. For businesses operating in Hong Kong or considering entry into the market, the following themes are most relevant: Technology-driven businesses and those engaged in AI, fintech, digital assets, semiconductors, or drone logistics will find a policy environment that is actively supportive through incentives, infrastructure investment, and regulatory openness. Family offices and wealth managers should examine the enhanced tax concession regime closely — the combination of fund tax enhancements, RElT measures, and the digital asset custodian platform makes Hong Kong increasingly compelling for sophisticated asset allocation.

Multinationals with Hong Kong operations need to proactively assess their BEPS 2.0 exposure and engage with advisors on corporate treasury and structure planning before new rules take effect. Mainland-linked businesses stand to benefit from the Northern Metropolis incentives and the deepening cross-border financial infrastructure, particularly in the area of yuan-denominated instruments and equity/debt settlement. Property investors in the ultra-luxury segment should factor the revised stamp duty into their acquisition economics, while the broader market continues to stabilise.

Conclusion The Hong Kong Budget 2026–27 is a statement of intent: the government is investing in Hong Kong's future rather than distributing today's gains. The return to surplus provides fiscal credibility; the technology and financial sector measures signal where growth is expected to come from; and the alignment with China's 15th Five-Year Plan provides a structural anchor for policy direction.

For businesses and investors, the message is clear — Hong Kong remains open, competitive, and forward-looking. The opportunities are real, but so too are the complexities, particularly around tax compliance, corporate structuring, and navigating an increasingly sophisticated regulatory landscape. Sinda Corporation is available to assist clients in understanding how the Budget's measures apply to their specific circumstances, whether in corporate advisory, tax planning, or cross-border transaction structuring. Please contact our team at www.sindacorporation.com for a consultation.

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