Hong Kong’s 2025 Budget:

Hong Kong’s 2025-26 Budget, delivered by Financial Secretary Paul Chan on 26 February 2025 has wrapped up and here are the main key takeaways.

Paul Chan recapped Hong Kong’s moderate economic growth (2.5% in 2024) and global uncertainties. The Budget reinforced Hong Kong’s role as a “super connector” between Mainland China and international markets, with a new emphasis on the focus of deepening ties with the Middle East and Southeast Asia.

Here are the key measures relevant to SMEs operating in Hong Kong, and included a few other interesting developments announced.

Measures Announced to Help SMEs

A total of HKD 1.5 billion has been injected into the Dedicated Fund on Branding, Upgrading and Domestic Sales and the Export Marketing and Trade and Industrial Organisation Support Fund to enhance market access and e-commerce capabilities.

The Hong Kong Trade Development Council (HKTDC) will launch the “E-Commerce Express” program, offering SMEs one-on-one consultations to penetrate Mainland China’s digital markets.

Additionally, the SME Financing Guarantee Scheme has approved HKD 288 billion in loans since inception, supporting 65,000 businesses. A 12-month principal moratorium arrangement, reintroduced in November 2024, allows SMEs to defer repayments, easing cash flow pressures.

Banks under the Taskforce on SME Lending have also expanded dedicated loan portfolios to HKD 390 billion, ensuring liquidity for business transformation.

Profits Tax Reduction

A 100% reduction in profits tax for the 2024-25 assessment year, capped at HKD 1,500 per business was announced. However, it is important to note that this is a step-down from the previous year’s HKD 3,000 reduction.

Salaries Tax Reduction

Similarly, salaries tax and personal assessment tax for 2024-25 are reduced by 100%, capped at HKD 1,500 per taxpayer.

Rates Reductions

Property owners and tenants will benefit from rates concessions for the first quarter of 2025-26:

• Domestic properties: HKD 500
• Non-domestic properties: HKD 500

10,000 Civil Servants Job Reduction

Taking a page from the current government spending reductions in the United States, the Hong Kong government plans to reduce the civil service establishment by eliminating 10,000 job posts by April 2027. The move aims to optimize resources without compromising service delivery, particularly in healthcare and social welfare. The government plans to make up for the lost productivity through reliance on AI.

Other Notable Measures Announced

Legalisation of Basketball Betting

To combat illegal gambling (estimated at HKD 70–90 billion annually), the government will regulate basketball betting and invite the Hong Kong Jockey Club to submit a licensing proposal. This measure seeks to channel black-market activities into a regulated framework, generating revenue and strengthening oversight. Also, studies have shown that betters in Hong Kong are increasingly looking for alternatives other than horse racing.

Conclusion

As expected the 2025 Budget was lacklustre in a year of economic hardship and uncertainty. However, measures like the civil jobs reduction is a step in the right way for Hong Kong to balance the annual deficit.

The full announcement can be read here: https://www.budget.gov.hk/2025/eng/pdf/e_budget_speech_2025-26.pdf