Tax measures proposed in 2026-27 Budget

Tax measures proposed in 2026-27 Budget 
     The measure will reduce the amount of tax payable by taxpayers for the year of assessment 2025/26. Taxpayers only need to file their profits tax returns and tax returns for individuals for the year of assessment 2025/26 as usual. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment. The reduction will only be applicable to the final tax for the year of assessment 2025/26, but not to the provisional tax of the same year. Taxpayers should pay the provisional tax on time as stipulated in the demand notes that have been issued to them. The provisional tax paid will be applied in payment of the final tax for the year of assessment 2025/26 and the provisional tax for the year of assessment 2026/27. The excess balance, if any, will be refunded.
 
     The reduction is not applicable to property tax. Nevertheless, eligible individuals with rental income may enjoy such a reduction under personal assessment.
 
     A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy tax reduction under both tax types. A taxpayer having business profits or rental income may elect for personal assessment in their tax returns for individuals for the year of assessment 2025/26. The reduction will then be calculated based on the tax payable under personal assessment, amount of which may be different from the amount of tax reduction a taxpayer would have got had he / she not elected for personal assessment. The actual amount will be assessed case by case. 
     Besides, the 2025 Policy Address proposed to extend the claim period of additional child allowance for newborns from one year to two years. This measure and the above Budget proposals will be effective starting from the year of assessment 2026/27. 
     Before the proposal is passed by the Legislative Council, the Inland Revenue Department will continue to charge stamp duty at the prevailing rate of 4.25% for residential property transactions concerned. Once the bill is passed by the Legislative Council and the amendment ordinance comes into effect upon gazettal, the purchasers or vendors concerned have to pay the difference of the stamp duty within 30 days.
 
(4) Relaxing the criteria for stamp duty relief in respect of intra-group transfer of assets
 
     The criteria for stamp duty relief in respect of intra-group transfer of assets under section 45 of the Stamp Duty Ordinance (Cap. 117) will be relaxed to expand the scope of eligible associated body corporates. The proposal applies to instruments for sale and purchase or transfer of assets executed on or after February 25, 2026.
 
     The measures above will be effected after the relevant ordinances have been amended. Details of the measures and examples of tax calculations are available on the website of the Inland Revenue DepartmentIssued at HKT 23:11