On 25 February 2026, the Financial Secretary of Hong Kong announced the 2026/27 Hong Kong Budget, which proposes various enhancements to tax-incentive regimes, including:

• Offering a preferential policy package that includes a 5% or 8.25% concession rate tax incentive, land grant arrangements and financial subsidies based on the merits of each case
• Enhancing the existing 8.25% tax concession for qualified corporate treasury centers by introducing additional tax incentives and flexibility in the regime, as well as a preapproval mechanism
• Relaxing the tax deduction for certain intellectual property (IP) from associates and lump-sum licensing fees for acquiring the rights to use IP; the tax deduction for research and development (R&D) expenditure is also under review for enhancement
• Introducing a new 8.25% tax concession for eligible commodity traders in international maritime businesses, potentially covering taxpayers that own the cargo and manage their fleet for cargo delivery; a tax deduction would be provided for ship acquisition costs for ship lessors under an operating lease, and deductibility rules of related finance cost would be relaxed
• Expanding the scope of eligible tax-exempted funds to cover specific funds-of-one (e.g., pension and endowment funds) and broadening qualifying investment categories to include digital assets, precious metals and specified commodities

Implications

Multinational enterprise (MNE) groups may follow the development of these proposed tax-incentive regimes and consider how they could facilitate investment and MNE group structural improvements.