Budget 2026: Hong Kong reduces taxes to attract enterprises and investment

To further attract enterprises to Hong Kong, the government will adjust preferential tax rates to 8.25% or 5%, depending on the company. 

Financial Secretary Paul Chan Mo-po said that the government will introduce policy tools, which also include land grant arrangements and financial subsidies, for new enterprises. The amendment bill will be introduced this year.

The government introduced a framework for preferential policies to promote industry and investment in last year’s policy address.

According to the Census and Statistics Department, the number of companies in Hong Kong with parent companies located outside Hong Kong has increased from 9,049 to 11,070 in four years, an increase of 22.3%.

Yang Xiaofeng, one of the founders of Chengdu Vifortek Healthcare Technology Co., Ltd, said the company has plans to set up in Hong Kong.

“Tax incentives can significantly reduce the operating costs of our research and development center, enabling us to attract more international talent,” said Yang.

Yang added that tax incentives have solidified their company's resolve to use Hong Kong as a base to expand globally.

“Taxes don't concern me much as a small business owner, since our business is now only marginally profitable,” said Wu Xiaoli, the founder of Tang Le Le Trading Limited, a mainland toy company set up in Hong Kong in August 2024, adding that she’s more concerned with rental and labour costs.

Wu said Hong Kong offers more opportunities for growth and this is a core demand for enterprises.

According to Ryan Ip, vice president of Our Hong Kong Foundation, a think tank focused on economic development, said the most common difficulties for enterprises that want to establish themselves in Hong Kong are that they are unfamiliar with local procedures for registration, office space and team building. 

He added that to solve this difficulty, the government should help to enhance the official setup guide with comprehensive information to ease information access

Chan said that tax policy is a key component of economic competitiveness.

“I will establish and chair an advisory committee on tax policy to gather views widely from commercial, industrial, and professional sectors so that Hong Kong's tax policy can reinforce economic development,” Chan added.