Hong Kong Tax measures proposed in 2026-27 Budget

2/25/2026

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Budget 2026-27: Key Tax Measures & Personal Relief

Following the Financial Secretary’s Budget announcement on February 25, 2026, several significant tax measures have been introduced to support individuals and businesses while adjusting property market cooling measures.

1. Tax Relief for 2025/26: 100% Rebate

To provide immediate financial relief, the Government has proposed a one-off reduction of Profits Tax, Salaries Tax, and Tax under Personal Assessment for the year of assessment 2025/26.

Reduction: 100% of final tax.
Ceiling: HK$3,000 per case.
Note: This does not apply to property tax, but rental income owners can still benefit by electing for Personal Assessment. You should continue to pay your Provisional Tax as scheduled; the credit will be applied in your final assessment.

2. Enhanced Family & Elderly Support (Effective 2026/27)

Starting from the 2026/27 year of assessment, several allowances will be increased to ease the burden on "the sandwich generation":

Personal Allowances: Increases to Basic, Married Person’s, and Single Parent allowances.
Newborn Support: The additional child allowance for newborns is extended to a two-year claim period.
Elderly Care: Both the Dependent Parent/Grandparent allowance and the deduction ceiling for Elderly Residential Care expenses will be raised.

3. Changes to Luxury Property Stamp Duty (AVD)

Effective from February 26, 2026, the Government is targeting the ultra-luxury residential market:

New Rate: Residential properties valued above HK$100 million will see the Ad Valorem Stamp Duty (AVD) rise from 4.25% to 6.5%.

Transition: For transactions executed before the bill is officially passed, the IRD will charge the current 4.25%. Owners will be required to pay the difference within 30 days of the new legislation being gazetted.

4. Streamlining Corporate Restructuring

To enhance Hong Kong's competitiveness as a corporate hub, the criteria for Stamp Duty relief on intra-group asset transfers (Section 45) have been relaxed. This expansion of "eligible associated body corporates" makes it easier and more tax-efficient for groups to move assets internally.

How OL can Assist?

Our team is navigating these changes—especially the nuances of Personal Assessment for rental income or Section 45 relief for your company—requires expert planning. Our team is ready to ensure you maximize your tax savings under these new proposals.

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The contents of this article are intended for informational purposes only. The article should not be relied on as legal or other professional advice.