Financial Secretary Paul Chan Mo-po delivered his Budget to the Legislative Council on Wednesday.
He noted that the tax revenue has increased over the past year, attributed to the booming economy and capital market. "Coupled with the reinforced fiscal consolidation program gradually bearing fruit, our public finances have improved sooner than expected," Chan added.
He noted that the Operating Account has returned to a surplus this financial year, enabling the government to suitably reinforce support for the people and small and medium enterprises (SMEs) within its means.
Based on the assessment of the current global and local economic situations, Chan forecasted that Hong Kong's economy will grow by 2.5 percent to 3.5 percent this year. He expected the inflation to be moderately higher than last year and forecasted the underlying inflation rate and the headline inflation rate this year to be 1.7 percent and 1.8 percent, respectively.
The following are the key statements:
Electric vehicles
- First registration tax (FRT) for electric private cars will not be extended beyond its expiry at the end of March this year
- FRT for electric commercial vehicles, electric motorcycles and electric motor tricycles will continue to be waived in full until the end of March 2028
Rates concession and tax reduction
- Rates concession for domestic and non‑domestic properties for the first two quarters of 2026/27, subject to a ceiling of HK$500 for each rateable property
- Reduce salaries tax, tax under personal assessment, profits tax for the year of assessment 2025/26 by 100 percent, subject to a ceiling of HK$3,000
- Increase the basic allowance and single parent allowance from HK$132,000 to HK$145,000, and the married person's allowance from HK$264,000 to HK$290,000
- Increase the child allowance and additional child allowance from HK$130,000 to HK$140,000
- Increase the allowance for maintaining a dependent parent or grandparent and raise the deduction ceiling for elderly residential care expenses
Culture, Sports and Tourism
- Allocate HK$1.66 billion to the Hong Kong Tourism Board
- HK$1.2 billion into the sports portion of Arts and Sport Development Fund to support sports development
- Earmark an additional HK$1 billion funding for the Built Heritage Conservation Fund to revitalize historic buildings
- Allocate HK$200 million for launching the "Northern Metropolis Urban‑rural Integration Fund" as a pilot scheme to encourage rural tourism projects and bring economic vitality to rural villages
- Earmark HK$100 million for attracting large-scale international exhibitions with new elements to Hong Kong through collaborating with relevant organizations on a pilot basis
- Draw more overnight visitors from mainland cities outside Guangdong, as well as emerging markets such as ASEAN and the Middle East
- Explore with airlines to offer multi‑destination flight itineraries to attract more overseas visitors to Hong Kong and the mainland
- A brand new show with the theme of light festivals across various locations at different times of the year to replace "A Symphony of Lights"
Artificial Intelligence +
- HK$2 billion to take forward digital education in primary and secondary schools by offering school‑based AI education programs.
- HK$50 million to invite public organizations to organise AI application courses and seminars for enhancing the AI awareness and application skills of the public
- HK$100 million for introducing leading technologies from the industry to accelerate digital intelligence transformation of the government.
- The Employees Retraining Board will be upgraded as Upskill Hong Kong to provide various types of skill-based training courses including AI application
- Proactive efforts to align with the National AI+ Initiative by promoting "industries for AI" and "AI for industries" through application
- The Hong Kong Artificial Intelligence Research and Development Institute Company Limited will come into operation in the second half of this year
Life and Health Technology
- HK$500 million to be injected into the Chinese Medicine Development Fund for undertaking research, training and international publicity on strategic themes.
- The International Clinical Trial Academy will be established next year to help enable the Mainland's biomedicine technology to go global and attract foreign investments
Northern Metropolis
- Transfer HK$150 billion of Exchange Fund to the Capital Works Reserve Fund in the coming 2 years to support the NM and other infrastructure projects
- Inject HK$10 billion into the Hetao Hong Kong Park to accelerate the development and speed up disposal of the remaining land parcels under Phase 1 development
- Inject HK$10 billion to establish a dedicated company this year to take forward the San Tin Technopole development
- Inject HK$10 billion initial capital to support Hung Shui Kiu Industry Park Company's operation and development needs
- HK$10 billion loan to support campus development in the NM University Town
- Exploring ways to encourage developers owning land in the NM to collaborate with technology or advanced manufacturing enterprises in submitting joint development proposals
- Kickstart projects such as the site formation and engineering infrastructure works for Ngau Tam Mei New Development Area and Stage2 of San Tin Technopole Phase1 Development, as well as construction of the government joint-user complex in Kwu Tung North
- Conduct public consultation on the proposal to introduce dedicated legislation to accelerate the NM development
Housing and Land Supply
- The total public housing production (including Light Public Housing) will be around 196,000 units in the coming five years, an increase of more than 80 percent compared to the five‑year period since the current‑term government took office
- The completion of private residential units will average at around 17,000 units annually over a five-year period from this year, a decrease of about eight percent over the annual average of the past five years
- The Land Sale Program for the coming year will include nine residential sites
- The government plans to make available land for the production of about 98,000 private housing units in the next five years
- The Government will not put up general commercial sites for sale in the coming year
- The Development Bureau is inviting the market to submit expressions of interest for post‑secondary student hostel development on three sites
Attract Enterprises and Investment
- Further develop the ASEAN and Middle East markets, and explore the potential of Central Asia, South Asia and North Africa markets
- Introduce an amendment bill this year to formulate preferential policy packages to promote industries and investment
- Set up a cross-sectoral professional services platform to support enterprises going global
- Inject HK$200 million into the BUD Fund, raise the funding ceiling of "Easy BUD" to HK$150,000 per application
- Continue providing loan guarantees to enterprises through the SME Financing Guarantee Scheme
- HK$52 million for Intellectual Property Academy on 2-year pilot
Increasing Revenue
- Implement BEPS 2.0 by OECD, expected to bring in additional tax revenue of HK$15 billion annually starting from 2027-28
- Adjust stamp duty on residential properties valued over HK$100 million from 4.25 percent to 6.5 percent, with retrospective effect from 26 Feb 2026
Support Measures
- Residential Care Service Vouchers for the Elderly increased to 7,000
- Community Care Service Vouchers for the Elderly increased to 16,000
- Elderly Health Care Voucher Pilot Reward Scheme extended to end-2028
- Accumulate voucher spending of HK$1,000 on specific primary healthcare services in the same year will receive a HK$500 voucher reward
- 3,600 short-term internship placements in government departments and public bodies for tertiary students
- New media thematic internship program in the mainland for young people
- HK$60 million to continue HYAB Funding Scheme for International Youth Exchange
- 450 additional places for day, residential and pre-school rehabilitation services in 2026-27
- HK$260 million to provide bridging and support services for primary school children receiving On-site Pre-school Rehabilitation Services
- Provision of Re-employment Allowance Pilot Scheme increased to over HK$220 million in 2026-27
New Industrialization
- Earmark about HK$220 million for establishing in Hong Kong the first national manufacturing innovation centre outside the Mainland
- To launch the New Industrialisation Elite Enterprises Nurturing Scheme this year, supporting targeted high-growth enterprises contributing to the development of new industrialization
Emerging Industries
- Trial projects for the low‑altitude economy will be rolled out in phases from the first half of this year
- Expediting the development of the third InnoHK research cluster, focusing on new materials and advanced manufacturing, energy, and sustainable development
- Review the listing requirements to facilitate and attract the listing of aerospace enterprises in Hong Kong
- Streamline licensing regime and promote future 6G applications
- The government introduced HK$10 billion Innovation and Technology Industry Oriented Fund to operate within this year
Green Development
- Earmark resources to launch 5-year waste reduction and recycling plan from 2026-27
- Explore the establishment of a Hong Kong-based Green Technology Projects Accelerator with Mainland and multilateral financial institutions
