2025-26 Hong Kong Budget

Innovation and Technology

• $1 billion to establish the Hong Kong Artificial Intelligence Research and Development Institute
• Host inaugural International Conference on Embodied AI Robot and International Young Scientist Forum on Artificial Intelligence
• Host WIPO’s publication event of the top 100 science and technology clusters this year
• $100 million earmarked to launch Pilot Manufacturing and Production Line Upgrade Support Scheme
• Study streamlining vetting of licence applications for operating Low Earth Orbit satellites
• HKEX to launch dedicated “TECH” channel to help prepare for listing applications

Finance

• Improve vetting process and optimise thresholds for listing
• Enhance the “board lot” system and issuance mechanism for structured products; increase position limits for key index derivatives
• Explore enhancing preferential tax regimes for funds and single family offices
• Host the Hong Kong Global Financial and Industry Summit and a flagship forum on fixed income and currencies
• Extend pilot grant scheme on insurance-linked securities for 3 years
• Implement linkage of faster payment systems with Mainland China

Shipping and Aviation

• Propose provision of half-rate tax concessions to eligible commodity traders
• Establish the Hong Kong Maritime and Port Development Board
• $210 million to install the port community system for smart port development
• Aviation Academy to expand training programmes to cover C919 aircraft-related subjects
• Promote Hong Kong’s development into Asia’s first aircraft dismantling, parts recycling, processing and trading centre

Tourism

• Allocate $1.23 billion to HKTB to pursue “tourism is everywhere” concept and implement Development Blueprint for Hong Kong’s Tourism Industry 2.0
• Host Fragrant Hills Tourism Summit this April
• Strategically attract sports events that can bring significant economic benefits in Hong Kong
• Study to re-plan some waterfront and former pier sites in Kowloon into a new harbourfront landmark, including commercial and residential developments and a yacht club

Education and Talent

• Launch a new round of Research Matching Grant Scheme, totalling $1.5 billion
• Increase annual quota of Hong Kong PhD Fellowship Scheme to 400 places
• Offer 4 000 short-term internship placements in policy bureaux and departments and public organisations in the coming year
• Relax requirements for joining and increase allowance limit of the GBA Youth Employment Scheme
• Organise the second “Global Talent Summit · Hong Kong” next year
• Enhance the New Capital Investment Entrant Scheme

Green Development

• InnoCentre in Kowloon Tong to become hub for GreenTech companies
• $300 million subsidy scheme to support installing EV fast chargers
• Provide tax exemptions for green methanol used for bunkering
• Set a Sustainable Aviation Fuel (SAF) consumption target
• $470 million for subsidising bus and taxi trades to switch to EVs
• Extend the Pilot Green and Sustainable Finance Capacity Building Support Scheme to 2028

Northern Metropolis

• $3.7 billion to expedite Phase 1 facilities of Hong Kong Park of Hetao Co-operation Zone
• Start tendering work for large-scale land disposal
• Complete re-zoning procedures for data facility cluster at Sandy Ridge
• Take forward planning and design of various railway development projects

Land

• About 13 700 units from 8 residential sites under the 2025/26 Land Sale Programme and various property developments
• No commercial sites will be put on sale in the coming year
• Make available land for around 80 000 private housing units in the coming 5 years

Housing

• Total public housing supply to reach 190 000 units in the coming 5 years
• Completion of over 17 000 private residential units annually in the coming 5 years.
• Expected first-hand private residential unit supply around 107 000 for the next 3 to 4 years

Caring and Inclusive Community

• Increase No. of Residential Care Service Vouchers for the Elderly to 6 000
• Increase No. of Community Care Service Vouchers for the Elderly to 12 000
• Additional annual provision of over $180 million to expand residential child care facilities, strengthen support for child abuse victims and their families
• Additional 1 280 day community rehabilitation and home care service places for persons with disabilities
• Regularise the Pilot Project on Enhancing Vocational Rehabilitation Services

Combat Illegal Betting

• Explore with HKJC on regulating basketball betting to combat illegal gambling

And, following is a topline update on Hong Kong's economic performance and fiscal outlook:

Economic Performance in 2024

• GDP growth: 2.5%
• Unemployment rate: 3.1% (latest)
• Headline inflation: 1.7%; underlying inflation 1.1%

Economic Prospects for 2025

• GDP growth forecast: 2% to 3%
• Headline inflation forecast: 1.8%; underlying inflation: 1.5%

Revenue and Expenditure

• Total Government Revenue 2025-26: $659.4 billion

(Profits tax: $192.2b; Land premium: $21b; Stamp duties: $67.6b; Investment income: $51.8b; Salaries tax: $96.5b; Other revenue: $230.3b)

• Total Government Expenditure 2025-26: $822.3 billion

(Social welfare: $139.1b; Health: $141b; Education: $112.4b; Infrastructure: $119.3b; Economic: $61b; Security: $69b; Environment and Food: $53.5b; Others (including community and external affairs): $127b

Consolidated deficit forecast 2024-25: $87.2 billion
Forecast consolidated deficit 2025-26: $67.0 billion
Fiscal reserves forecast to be $647.4 billion at end-March 2025
Fiscal reserves forecast to be $579.1 billion by end-March 2030

Initiatives
·        Enhanced fiscal consolidation programme

• Strictly control expenditure, supplemented by increasing revenue
• Maintain competitiveness of low and simple tax regime
• Uphold “user pays” principle

·        Containing expenditure growth

• Pay freeze for all personnel of executive authorities, civil servants and Members of LegCo, Judiciary and District Councils
• Reduce civil service establishment by 2% each in 2026/27 and 2027/28
• Adjust transport subsidy schemes

·        Increase revenue

• Raise air passenger departure tax to $200
• Impose application fee and raise visa fee under various talent and capital investor admission schemes
• Review government tolls and fees for road users

·        Issue bonds to support expenditure on infrastructure works over next 5 years