Tax and Immigration

Hong Kong | The 2025-26 Budget: innovate to grow and lead

Summary

On 26 February 2025, the Financial Secretary of Hong Kong SAR, Mr. Paul Chan, announced the Hong Kong 2025-26 Budget (the “Budget”).  With a complicated and changing economic environment, Hong Kong’s economy recorded a growth of 2.5 percent in 2024. In the midst of global changes, the Budget suggests driving economic growth with technology innovation as the core engine. Several talent, tax and immigration measures have also been proposed to support the growth and the government’s financial stability.

In this Alert, we highlight the proposals relevant to global mobility tax and immigration.

The details

Immigration measure updates

Immigration measure	Development
Employment Visa	The Admission Scheme for Mainland Talents and Professionals and the General Employment Policy will be enhanced to allow young non-degree talents with appropriate qualifications and experience to come to Hong Kong.
The new Capital Investment Entrant Scheme	A series of enhancement measures will be launched to further attract eligible individuals to come to Hong Kong.
New Fee Structure for Visa Applications	With effect from 26 February 2025, a new application fee will be introduced under various admission schemes to attract talent and capital investors; and the visa issuance fees for approved applications will be raised based on the length of the limit of stay. ·       Application fee for a specified scheme application – HK$600 ·       Visa issuance fee for a visa with period of validity of not more than 180 days – HK$600 ·       Visa issuance fee for a visa with period of validity of more than 180 days – HK$1,300

Individual tax relief and measure

Despite an estimated budget deficit of $87.2 billion, the Budget is proposing a one-off relief to reduce salaries tax and tax under personal assessment for year of assessment 2024/25 by 100%, subject to a ceiling of $1,500 in order to ease the burden on livelihoods. The reduction will be reflected in the final tax payable for the year of assessment 2024/25.

It is important to note that last year’s budget included a measure to increase the tax rate for high-income earners. Beginning with the 2024/25 assessment year, a two-tier standard rate regime will be implemented, where individuals with a net income up to $5,000,000 will be taxed at 15%, while the residual income exceeding $5,000,000 will be taxed at 16%.  The government estimated that around 12,000 taxpayers would be impacted.

This year, the proposal aims to maintain the competitiveness of Hong Kong’s straightforward and low tax regime, with a focus on avoiding significant tax rate increases or the introduction of new taxes.  Although there is no adjustment to the personal allowances under salaries tax, there is no increase to the current tax rates, which is welcome news to the public and international talents who are contemplating to move to Hong Kong.  Appendix 1 shows a summary of the current and proposed Tax Rates, Allowances, and Deductions under Salaries Tax.

Treaty Network Expansion

To expand Hong Kong’s trade network and attract more inward investment and enterprises from the Global South markets to Hong Kong, the Government is exploring the signing of investment agreements with Saudi Arabia, Bangladesh, Egypt and Peru, and conducting negotiations with 17 countries on Comprehensive Avoidance of Double Taxation Agreements.

Our observation

The 2025/26 budget announcement reflects a balanced approach aimed at fostering economic growth amidst the challenging global economic environment. It proposes flexibility and facilitation measures under different talent admission schemes to further enhance the attractiveness of the existing immigration schemes. We will wait for further details about these measures which will facilitate the global or cross-border move of employees.

Employers are encouraged to take advantage of the enhanced talent attraction schemes and the stable tax environment while considering the new visa fee structure when budgeting for employee relocations to Hong Kong.

Overall, we welcome the government’s commitment to maintaining a simple and low tax regime, which is crucial for preserving Hong Kong’s attractiveness to talents and promoting inbound mobility. The expansion of the tax treaty network will not only foster more business development opportunities, but also facilitate international talent movement. Both employers and employees should remain informed about the upcoming changes and plan ahead accordingly.

	Current Fiscal year	Proposed
Tax Rates
Standard rates	15% for net income up to $5,000,000 16% for net income in excess of $5,000,000	No change
Progressive rates	From 2% to 17%	No change
Various Personal Allowances
Basic Allowance	$132,000	No change
Married Person’s Allowance	$264,000	No change
Child Allowances – 1st to 9th child (each): Year of birth Other years	$260,000 $130,000	No change No change
Dependent Parent/Grandparent Allowance: Aged 55-59 Aged 60 or above	$25,000 $50,000	No change No change
Additional Dependent Parent/Grandparent Allowance – for residing continuously with taxpayer Aged 55-59 Aged 60 or above	$25,000 $50,000	No change No change
Dependent Brother/Sister Allowance – for whom no child allowance is claimed	$37,500	No change
Single Parent Allowance	$132,000	No change
Disabled Dependent Allowance – in addition to any allowances granted to the dependent	$75,000	No change
Personal Disability Allowance – in addition to any allowances granted to the disabled person	$75,000	No change
Deduction Ceiling
Home Loan Interest*	$100,000	No change
Elderly Residential Care Expense	$100,000	No change
Self-education Expenses	$100,000	No change
Charitable Donations [Percentage % x (Income – Allowable Expenses – Depreciation Allowances)]	35%	No change
Mandatory Contributions to MPF / Contributions to other recognized retirement schemes	$18,000	No change
Qualifying Annuity Premiums (QDAP) and/or Voluntary Contributions to Tax Deductible MPF (TVC)	$60,000	No change
Qualifying Premiums paid under Voluntary Health Insurance Scheme (VHIS)	$8,000 for each insured person	No change
Domestic rents deduction from 2022/23*	$100,000 annual ceiling	No change
Tax Waiver
For Salaries Tax or Tax under Personal Assessment	100% waiver, subject to a ceiling of $3,000	100% waiver, subject to a ceiling of $1,500

* From year 2024/25, increase to $120,000 if taxpayer resides with first child born on or after 25 October 2023 until the child reaches the age of 18.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

James Clemence
Asia Pacific CEO

Bruce Lee
Hong Kong SAR Territorial Leader

Adam Chiu
Partner

Steven Lim
Partner

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