The Hong Kong Institute of Certified Public Accountants announced its 2026-27 Budget proposals on Wednesday, estimating the 2025-26 deficit at about HK$1.4 billion and fiscal reserves at around HK$652.9 billion by end-March 2026, mainly due to continued spending on major infrastructure.
The HKICPA also expects a rebound in stock market-related stamp duty revenue to result in an operating account surplus this fiscal year, with the debt-to-gross domestic product ratio standing at about 9 percent in 2024 and projected to remain between 12 percent and 16.5 percent through 2029-30.
While fiscal reserves are on the low side by past standards, HKICPA said the city's financial position remains sound, backed by more than HK$4 trillion in Exchange Fund assets and a deficit-to-GDP ratio of about 4.8 percent.
To attract investment, HKICPA proposed offering a five-year half-rate profits tax concession of 8.25 percent for qualifying regional headquarters, along with an additional two-year tax exemption for mainland enterprises, while suggesting a pilot "IPO Connect" scheme to allow Chinese Mainland institutional investors to subscribe for Hong Kong initial public offerings.
It also recommended raising stamp duty on residential leases and lifting the top salaries tax rate from 16 percent to 16.5 percent. On talent policy, it proposed extending statutory maternity leave to 16 weeks and paternity leave to 10 days, and launching a "Property Connect" scheme to allow newly arrived mainland talent to buy first-hand flats using yuan.
Cynthia ZHONG
