The Financial Secretary on February 26, 2025, delivered the 2025-2026 budget. While the budget does not propose and changes to tax rates for 2025-2026, it does include proposals related to profits tax, salaries tax, property tax, stamp duty, and hotel accommodation tax.
Profits tax
- Standard tax rate for corporations remains at 16.5%, and for unincorporated businesses at 15%
- Two-tiered profits tax rates regime continues, allowing qualifying corporations to be taxed at 8.25% on the first HKD 2 million of assessable profits and at 16.5% on the remaining balance (7.5% and 15% for qualifying unincorporated businesses)
- Proposed 100% reduction in profits tax payable for 2024-2025, subject to a ceiling of HKD 1,500
- Proposals will be formulated to enhance preferential tax regimes for funds and single-family offices
- Proposed review of tax deduction arrangements for the purchase of intellectual property usage rights and related transactions
- Proposed expansion of Hong Kong's network of comprehensive avoidance of double taxation agreements with 17 countries
- Half-rate tax concession for eligible commodity traders
- Enhanced tax measures for the maritime industry, including a tax deduction on ship acquisition costs for ship lessors under an operating lease
Salaries tax
- Proposed 100% reduction in salaries tax payable for 2024-2025, subject to a ceiling of HKD 1,500
- The tax charge for salaries tax is the lower of:
- Net assessable income less charitable donations and allowable deductions at the standard rate (15% on the first HKD 5 million of net income and 16% on the remainder), or
- Net assessable income less charitable donations, allowable deductions, and personal allowances charged at progressive rates
Property tax, stamp duty, and hotel accommodation tax
- Increase to HKD 4 million in the maximum value of properties chargeable to a stamp duty of HKD 100, starting from February 26, 2025
- Rates waiver for each domestic property for the first quarter of 2025-2026, subject to a ceiling of HKD 500 for each rateable property
- Progressive rating system for domestic properties effective from January 1, 2025
- Rates concession for each non-domestic property for the first quarter of 2025-26, subject to a ceiling of HKD 500 for each rateable property
- No proposed changes to hotel accommodation tax, but increased from 0% to 3% starting January 1, 2025
- Property tax rate remains at 15%