The Hong Kong 2025-26 Budget, announced by Financial Secretary Paul MP Chan, focuses on fortifying Hong Kong’s economic resilience while introducing policies to support small and medium enterprises (SMEs). As a vital component of the city’s economic framework, SMEs contribute significantly to employment, innovation, and economic growth. This year’s budget introduces financial assistance, tax incentives, market expansion initiatives, and digital transformation support to empower SMEs amid global economic challenges.
This article explores the key measures introduced in the 2025-26 Budget that specifically benefit SMEs, with a particular focus on tax relief initiatives, which are crucial for alleviating financial burdens and enhancing business sustainability.
1. Financial Support & Loan Accessibility for SMEs
The Hong Kong government recognizes that many SMEs continue to face financial challenges due to global economic uncertainties. The 2025-26 Budget provides a variety of financial support measures, including loan guarantees, debt relief, and targeted financial assistance.
1.1 SME Financing Guarantee Scheme (SFGS)
- The government has approved over HK$288 billion in loans under the SME Financing Guarantee Scheme (SFGS), benefiting nearly 65,000 SMEs.
- The principal moratorium arrangement, reintroduced in November 2024, allows SMEs to defer loan repayments for up to 12 months, reducing financial strain during business recovery.
- A newly established Taskforce on SME Lending, involving major banks, has increased the SME-specific loan portfolio to over HK$390 billion, ensuring continued access to credit for small businesses.
These initiatives aim to alleviate short-term liquidity issues, allowing businesses to focus on growth and operational stability.
2. Tax Relief Measures for SMEs
Taxation remains one of the key concerns for SMEs, especially in uncertain economic conditions. The 2025-26 Budget introduces tax reductions, deductions, and incentives to ease financial burdens and encourage business growth.
2.1. 100% Profits Tax Reduction
- The government has announced a 100% profits tax reduction for the 2024/25 assessment year, capped at HK$1,500 per taxpayer.
- This initiative is expected to benefit a significant number of SMEs, providing them with extra funds for investment in business development.
2.2. Intellectual Property (IP) Tax Deductions
Intellectual property (IP) is a crucial foundation for the development of emerging industries. Recognizing the growing significance of IP-driven businesses, the Hong Kong government has announced plans to review tax deduction arrangements for the acquisition, development, and trading of IP rights. However, these arrangements have not yet been implemented.
- The government will assess the feasibility of offering tax deductions for lump sum licensing fees related to acquiring rights to use IP.
- Expenses incurred from purchasing IP rights from associated companies are under review to determine their eligibility for future tax relief.
- This review aims to evaluate the potential impact on IP-intensive industries and promote IP trading in Hong Kong.
While these measures are being explored, the government’s commitment to enhancing Hong Kong’s IP trading ecosystem remains a key focus. Businesses engaged in research, development, and technological innovation should stay informed about future updates regarding IP-related tax policies.
2.3. Stamp Duty Fee Deduction for Residential and Non-Residential Properties
To stimulate the real estate market and encourage property transactions, the Hong Kong government has introduced stamp duty reductions for both residential and non-residential properties. This initiative aims to ease the financial burden on property buyers and investors while promoting economic activity in the real estate sector.
- Reduction in Stamp Duty Rates: The government will lower the stamp duty rates applicable to the purchase of residential and non-residential properties, making real estate investments more accessible.
- Maximum Value Adjustment: With immediate effect, the threshold for properties eligible for a reduced stamp duty charge of HK$100 will be increased from HK$3 million to HK$4 million, providing greater affordability for property buyers and stimulating transactions in both residential and non-residential property markets.
- Commercial Property Stimulus: The stamp duty relief extends to non-residential properties, such as office spaces and retail units, encouraging investment in commercial real estate.
- Market Revitalization: These measures aim to boost market confidence, increase transaction volumes, and support property-related businesses.
This policy adjustment is expected to provide direct financial relief to individuals and businesses engaging in property transactions while contributing to overall economic recovery.
3. AI Industry Development
Artificial Intelligence (AI) is a key driver of technological innovation and business transformation. The 2025-26 Budget introduces a range of initiatives to support AI research, development, and commercialization in Hong Kong.
3.1 Government Investment in AI Infrastructure
- The government will establish an AI Supercomputing Center at Cyberport to provide businesses with access to high-performance computing resources.
- Additional HK$1 billion will be allocated to fund AI research and development projects.
3.2 AI Adoption in SMEs
- The government will launch an AI Subsidy Scheme to help SMEs integrate AI-powered solutions into their business operations.
- Funding will be available for SMEs adopting AI-driven customer service automation, predictive analytics, and supply chain optimization.
3.3 Talent Development in AI
- The government will collaborate with universities and research institutions to train AI specialists and develop a strong talent pool in AI and data science.
- AI-related courses and certification programs will be introduced to equip professionals with advanced AI skills.
3.4 AI Startups & Innovation
- A dedicated AI Startup Fund will be launched to support AI-driven entrepreneurship and innovation.
- The fund will provide seed funding, mentorship, and access to incubation programs for early-stage AI startups.
These initiatives aim to position Hong Kong as a leading AI innovation hub and enable SMEs to leverage AI technologies for business growth and efficiency.
4. Talent Hub Initiatives
The Hong Kong government is making significant efforts to attract and nurture talent to enhance the city’s competitiveness.
4.1 Attracting Global Talent
- The government will expand the Quality Migrant Admission Scheme (QMAS) to attract high-caliber professionals.
- More support will be provided for international talent relocation to Hong Kong.
4.2 New Capital Investment Entrant Scheme
The New Capital Investment Entrant Scheme (NCMES) is designed to attract high-net-worth individuals to invest in Hong Kong, contributing to the city’s economic development and financial market. The scheme allows eligible investors to obtain Hong Kong residency by making a qualified capital investment in specified assets.
- The scheme has received over 880 applications with an expected investment of HK$26 billion.
- The government plans to introduce enhancement measures to provide greater flexibility for investors.
These initiatives aim to position Hong Kong as a leading talent hub and support the development of a highly skilled workforce for future economic growth.
5. Conclusion
The 2025-26 Hong Kong Budget outlines a robust framework for SME growth, financial relief, market expansion, and digital transformation. The government’s pro-business tax policies, financial assistance programs, and support for technological adoption are designed to empower SMEs in a rapidly evolving economic landscape.
For SMEs looking to capitalize on these opportunities, it is essential to stay informed, leverage available funding, and adopt new technologies to maintain competitiveness in Hong Kong’s dynamic business environment.
For more details, please visit the official website:
https://www.budget.gov.hk/2025/eng/index.html.
Please note that the 2025-26 Budget is subject to approval by the Legislative Council of Hong Kong before its full implementation.
