On February 26, 2025, the Financial Secretary announced the 2025/26 Hong Kong Budget, outlining a range of fiscal policies aimed at economic stability and long-term growth. The budget includes both immediate relief measures and strategic tax initiatives designed to enhance Hong Kong’s competitiveness. Below is a breakdown of the most significant tax proposals.
One-Off Tax Reductions
For the 2024/25 assessment year, individuals and businesses will benefit from a one-time 100% tax reduction on salaries tax, tax under personal assessment, and profits tax, capped at HKD 1,500. This measure is expected to provide relief to taxpayers amid economic recovery efforts.
Property Tax Relief: Domestic and Non-Domestic Rates
A rates waiver will be granted for each domestic rateable property, while a rates concession will be applied to non-domestic properties for the first quarter of 2025/26, subject to a ceiling of HKD 500 per property. This aims to support property owners and businesses by reducing short-term financial burdens.
Stamp Duty Adjustments
Effective February 26, 2025, the ad valorem stamp duty for property transactions has been revised. One major change is the increase in the maximum property value eligible for the HKD 100 stamp duty, rising from HKD 3 million to HKD 4 million. These adjustments aim to stimulate the real estate market by lowering transaction costs for mid-tier properties.
Implementation of Global Minimum Tax
A 15% Global Minimum Tax will be introduced under the OECD framework, targeting multinational enterprise groups with annual consolidated revenues of at least EUR 750 million. A legislative bill was submitted to the Legislative Council in January 2025 to ensure compliance with international tax standards and prevent profit shifting.
Increase in Air Passenger Departure Tax
To support the government's fiscal initiatives, the air passenger departure tax will rise from HKD 120 to HKD 200 per passenger, starting in Q3 of 2025/26. This measure is expected to contribute to government revenues while aligning with regional aviation levies.
Enhancing Preferential Tax Regimes for Funds and Family Offices
New tax incentives are developing to strengthen Hong Kong’s financial services sector. These include:
Expanding the definition of “fund” under the tax exemption regime.
Enhancing tax concession arrangements for carried interest distributions by private equity funds.
Introducing further tax benefits for single-family offices.
These measures aim to reinforce Hong Kong’s status as a global financial hub and attract high-net-worth individuals and institutional investors.
Tax Incentives for the Maritime Industry
To align with evolving international tax standards, Hong Kong will enhance its ship leasing regime, including:
Tax deductions for ship acquisition costs for ship lessors under operating leases.
Half-rate tax concessions for eligible commodity traders.
Tax exemptions for green methanol used in bunkering, supporting Hong Kong’s shift towards sustainable shipping solutions.
Review of Tax Deduction Policies for Intellectual Property
To drive innovation and strengthen intellectual property (IP) trading, the government will review tax deductions related to:
Lump sum licensing fees for acquiring IP rights.
Expenses incurred in obtaining IP usage rights from affiliates and third parties.
This initiative is expected to incentivize businesses to invest in technology, innovation, and intellectual property development.
Expansion of Double Taxation Agreements
Hong Kong is actively negotiating Comprehensive Avoidance of Double Taxation Agreements (CDTAs) with 17 countries, aiming to enhance international trade and investment relationships by preventing double taxation.
With these legislative changes expected to take effect soon, businesses and individuals should stay informed and seek proactive tax planning strategies. Companies operating in Hong Kong must ensure compliance with the new regulations while leveraging available tax incentives to optimize their financial strategies.
How Woodburn Can Assist
Navigating Hong Kong’s evolving tax landscape requires expert knowledge and strategic planning. Woodburn Accountants & Advisors offers tailored tax advisory, compliance support, and corporate structuring services to help businesses align with the latest regulations. Whether you need assistance with profit tax optimization, VAT structuring, or international tax strategies, Woodburn provides the expertise required to maximize tax efficiency while ensuring full compliance. Reach out today to learn how we can help your business succeed in Hong Kong’s dynamic economic environment.
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