Hui Ching-yu: Hong Kong plans to introduce a preferential tax regime to attract high-value-added industries, with concessionary tax rates as low as 8.25%.

On October 5, the Secretary for Financial Services and the Treasury, Hui Ching-yu, said at a meeting of the Legislative Council Panel on Financial Affairs that the 2025 Policy Address announced that the Hong Kong SAR Government would formulate a package of preferential policies to attract high-value-added industries and high-potential enterprises to Hong Kong. As one of the policy tools in the preferential policy package, the 2026 Policy Address further announced that the Government will submit an amendment bill by the end of this year to establish a concessionary tax regime, considering, among other things, an enterprise's investment plan and its substantive contribution to Hong Kong's economy, with a view to providing tax concessions to eligible enterprises in priority industries. The preferential policy package has a variety of policy tools, including land grants, subsidies or tax concessions. The proposed concessionary tax regime is one of them, with the aim of attracting enterprises engaged in priority industries such as advanced manufacturing, innovation and technology research and development, headquarters activities, logistics and supply chain management, and finance. In addition to certain basic requirements (such as carrying out prescribed activities, minimum thresholds for operating expenditure and the number of full-time employees, etc.), if an enterprise's investment plan and its substantive contribution to Hong Kong's economy meet certain conditions and levels, it may be granted a concessionary tax rate of 5% or half the tax rate (i.e. 8.25% for corporations), for a maximum qualifying period of five years. Hong Kong will select enterprises with the relevant conditions and development potential through a strict approval mechanism. Both enterprises newly established in Hong Kong and enterprises already having business in Hong Kong may submit their business plans in Hong Kong through Invest Hong Kong and the Office for Attracting Strategic Enterprises to apply for tax concessions under the proposed concessionary tax regime. Representatives of the two bodies are also present here today. The Steering Committee on Attracting Industries and Investment Preferential Policies, chaired by the Financial Secretary of Hong Kong, will be responsible for approving applications. With the assistance of the relevant policy bureaux and departments, the Hong Kong steering committee will examine enterprises' applications comprehensively, taking into account factors including the enterprises' scale, nature and business plans. The Hong Kong steering committee will set requirements on the amount of expenditure and the number of full-time employees for approved enterprises, and will impose additional conditions on a case-by-case basis. Enterprises may be concerned about whether the proposed concessionary tax regime will replace the existing tax concessions provided to enterprises in various fields such as finance, maritime transport and aviation. The proposed concessionary tax regime is designed to complement the existing industry-specific concessionary tax regimes. Income earned by all eligible enterprises may continue to enjoy the concessionary tax rate or be exempt from profits tax without prior approval. Hong Kong plans to submit the amendment bill to the Legislative Council in December this year, with a view to implementing the proposed concessionary tax regime in the 2027/28 tax year.