What tax reduction did the 2026-27 Budget give to Hong Kong businesses?

What was announced. The legislation was passed on 13 May 2026 and gazetted on 22 May 2026. For the year of assessment 2025/26 (1 April 2025 to 31 March 2026), profits tax, salaries tax and tax under personal assessment are reduced by 100%, subject to a ceiling of HK$3,000 per case. For profits tax the ceiling applies to each business. For many small businesses with low tax the saving is the whole bill.

How it works.

• It reduces the final tax for 2025/26. It does not reduce provisional tax, so you still pay provisional tax on time; any excess is applied to the 2026/27 provisional tax or refunded.
• No application is needed. The Inland Revenue Department (IRD) applies it in the final assessment, and will reassess any 2025/26 assessments issued before the law was enacted.
• It does not apply to property tax.
• A person with both a business and a salary gets the reduction under each tax type separately.

Rates unchanged. The two-tiered profits tax rates (8.25%/16.5% for companies, 7.5%/15% for unincorporated businesses) stay as they are.

Other 2026-27 measures mainly affect individuals (higher allowances from 2026/27) and stamp duty (see the answers on salaries tax allowances and stamp duty).