The 2026–27 Budget: Integrating financial and innovative growth for diversified economic development

Deloitte China welcomes the 2026–27 Budget delivered by the Financial Secretary, with the theme "Driving High-quality, Inclusive Growth with Innovation and Finance." Building on Hong Kong's good economic momentum, this year's Budget introduces measures to advance emerging sectors and reinforce traditional industries, thereby attracting enterprises, capital and talent to fuel the next wave of growth.

The Hong Kong SAR government projects a surplus of HKD2.9 billion for FY2025–26, with fiscal reserves expected to stand at HKD657.2 billion by the end of March 2026. This stronger fiscal position compared with last year provides a robust foundation for further initiatives to support economic diversification and industrial upgrading.

Deloitte China Senior Partner Patrick Tsang says, "Hong Kong is fully committed to developing the new 'finance in the south, innovation in the north' industry pattern, and we are delighted that the latest Budget proposes a 'Finance+' strategic vision to support this transformation. By harnessing our financial strengths to drive growth across all sectors, particularly in cutting-edge areas such as AI and space technology, and leveraging our strong capital markets and innovation capabilities, we can power local growth and serve national priorities.

"By deepening collaboration across government, industry, academia, research institutes and investors, advancing the 'Finance+' strategy, and focusing on AI industrialisation and integrating 'AI+' throughout all sectors, Hong Kong can accelerate its development as an international Innovation and Technology (I&T) hub as highlighted in the national 15th Five-Year Plan, and achieve comprehensive transformation and upgrading. We are pleased that the Budget has adopted several of our suggestions on policy directions and specific measures. Through the combined strength of finance and innovation technology, Hong Kong can build on its growth momentum and create a thriving ecosystem for traditional and emerging industries."

Empowering capital market development with strategic reforms

Deloitte China Southern Region Managing Partner Edward Au says, "This Budget injects powerful evolutionary momentum into Hong Kong's capital markets. Through optimising listing regimes, shortening the settlement cycle, and transitioning to a paperless securities market, the government is precisely optimising the market for speed, scale and cost-efficiency. This series of measures will not only enhance listing certainty for biotech and specialist technology enterprises but will also architect a more international, highly liquid and multi-dimensional financial ecosystem. This strategic reform package will cement Hong Kong's status as a premier global fundraising platform, creating a high-value, win-win landscape for investors and issuers.

To further bolster Hong Kong's edge as a premier global fundraising gateway, Deloitte advocates for a more proactive and targeted approach to attracting international listings. The focus should centre on the dual pillars of tax optimisation and liquidity enhancement—specifically, establishing 'tax safe harbours' for dual-listed companies and exploring a liquidity-driven, targeted stamp duty adjustment mechanism.

Edward Au adds, "Beyond the regulatory framework, Hong Kong should also offer integrated solution for international issuers—ranging from specialised index products and research frameworks to a seamless 'regional headquarters + listing' value proposition—to minimise institutional cost. By building a more comprehensive support system for international issuers, Hong Kong will not only attract global issuers and capital but also ensure robust liquidity and efficient price discovery. This is key to cementing our position as the preferred capital platform for international and Global South enterprises expanding in Asia."

Deloitte applauds the Budget's proposal to facilitate aerospace listings in Hong Kong. As a key intersection of national strategy and business innovation, the aerospace industry has high R&D intensity and long investment cycles, requiring a global financial hub like Hong Kong to provide diverse financing channels and robust risk management support. This not only aligns precisely with the national strategic blueprint of building a space power, but also signals that Hong Kong's capital market is accelerating the development of a forward-looking, high-value industrial architecture. This will, in turn, facilitate a deeper and more effective integration of technology and capital, reinforcing Hong Kong as the preferred platform for the global aerospace industry's financing and strategic expansion.

Attracting global enterprises through tax optimisation

Deloitte China Hong Kong Tax & Business Advisory Leader Anthony Lau says, "We welcome the government's continuation of the initiative set out in last year's Policy Address to formulate a preferential policy package for promoting industry and investment, encompassing land grant arrangements, financial subsidies or tax concessions (with a concessionary tax rate of half-rate or 5%), to further attract high-value-added industries and high-potential enterprises to establish their presence in Hong Kong and drive its high-quality development.

"We are pleased to note that the government has already developed a preliminary framework in this regard, indicating that factors such as the industry sector and technological sophistication of the enterprise, and its potential economic contribution to Hong Kong and capacity for job creation, will be taken into consideration. A key merit of this initiative is that the proposed preferential policies are intended to be broadly applicable and not confined to specific industries, which distinguishes them from the existing tax incentives that generally apply only to designated sectors (such as funds) or specific operational models (such as corporate treasury centres).

"Furthermore, the proposed policy package is expected to be comparatively flexible and adaptable, which is particularly important for attracting investment into the Northern Metropolis. We look forward to the draft amendment bill the government plans to submit within the year, and we hope that the government will fully consult the industry during the legislative process to ensure the policies align with practical needs and are internationally competitive."

Deloitte China Hong Kong Budget Team Lead Partner Polly Wan says, "We are pleased to see the government further enhancing the tax measures for Corporate Treasury Centres (CTCs). We recommend that the government extend the scope of unilateral tax credit for CTC income and provide alternative relief measures for excess withholding taxes, such as allowing tax deductions. At the same time, we are delighted that the government has adopted Deloitte's proposal to introduce a pre-approval mechanism for CTCs. This will help enterprises establish their business arrangements at an early stage, enhance tax certainty and attract more multinational corporations to use Hong Kong as their financing and fund management platform.

"Furthermore, the government has maintained the core advantages of the simple and low tax regime while pursuing fiscal prudence and enhancing international competitiveness through preferential tax measures. We also welcome the establishment of the Advisory Committee on Tax Policy, which will bring together insights from the business and professional sectors to ensure tax policies better support economic development needs. Overall, these measures demonstrate the government's  commitment to continuously improving the tax system and responding to industry needs, thereby helping to strengthen market confidence in Hong Kong's long-term economic prospects."

Balancing Regulation and Innovation in Digital Assets

Deloitte China Hong Kong Digital Asset Leader Robert Lui says, "We welcome the implementation of a licensing regime for stablecoin issuers, with the first batch of licenses to be issued soon. As the creation of new use cases will accelerate the integration of digital assets with traditional financial markets, we recommend ongoing dialogue with stakeholders to further drive this process. The government's plan to provide guidelines on tokenisation technology in bond issuance and transactions is expected to strengthen market infrastructure, driving the progressive maturation of the digital asset market, improving efficiency and liquidity and achieving convergence with the securities, bond and fixed income markets.

"Furthermore, the establishment of a digital asset platform under CMU OmniClear to support the issuance and settlement of digital bonds, with plans to gradually extended to other digital assets and linked with other tokenisation platforms in the region, is expected to become a key driver of cross‑border capital inflows and market expansion. It also demonstrates the government’s forward‑looking approach to cross‑boundary digital asset development."

With continued enhancement of the regulatory framework and more innovative products and use cases, Deloitte suggests that regulators strengthen investor education while facilitating the offering of new products to help the market understand the rationale and the risks of digital assets. By balancing regulation with market development, Hong Kong is well positioned to continue leading the way in product innovation, cross-border interoperability and institutional advantage, further consolidating its position as an international financial centre and innovation hub while ensuring the healthy evolution of the overall ecosystem.

Driving growth in AI, new industrialisation and the low altitude economy

Deloitte China Southern Region TMT Leader Bong Chan adds, "We welcome the government's launch of the 'New Industrialisation Elite Enterprises Nurturing Scheme', which focuses on supporting targeted high-growth enterprises that contribute to the development of Hong Kong's new industrialisation. With the support of these policy initiatives, and by leveraging Deloitte's professional expertise and experience in helping businesses grow, we can assist more enterprises in capitalising on the opportunities brought by this new scheme and, in turn, contribute to Hong Kong's overall economic growth."

"The Budget also mentions that The Hong Kong Investment Corporation will collaborate with leading enterprises and establish the Hong Kong RISC-V Alliance. We believe this alliance will actively promote the R&D and industrialisation of RISC-V technology, foster industry-academic-research synergy in the GBA, and lay a solid foundation for the development of chips technology in Hong Kong."

Deloitte looks forward to the launch of HKD10 billion Innovation and Technology Industry Oriented Fund. By using government capital to crowd in more market co investors, this will provide larger scale and more flexible financing support to high potential enterprises, thereby accelerating the commercialisation and internationalisation of research outcomes.

Deloitte China Hong Kong Business Managing Partner Allen Wong says, "We welcome the continued investments proposed by the government in AI and innovation, including the establishment of the Hong Kong Artificial Intelligence Research and Development Institute to drive the industrialisation of AI and wider adoption across industries, and the strengthening of Hong Kong's computing infrastructure. With numerous success cases in AI and innovation through subsidy schemes, we recommend further targeting specific strategic industries through the venture fund model to maximise Hong Kong's unique strengths.

Moreover, the government's allocation of HKD50 million for AI training, together with University Grants Committee-funded universities introducing 27 STEAM programs, will help address talent shortages and gaps in AI knowledge. These initiatives are expected to deliver significant benefits, as more integrative multi-disciplinary learning will be critical for transformative innovation.

Deloitte China Hong Kong Strategy & Business Design Leader Falcon Chan adds, "This year's Budget firmly positions the low altitude economy (LAE) as a new growth engine for smart city development and regional integration. The government has completed the first stage of legislative amendments for unmanned aircraft and will now refine the civil aviation framework to build a comprehensive LAE ecosystem, signalling a shift from pilots to institution building.

"The Budget also underscores momentum in the Regulatory Sandbox. Thirty-two pilot projects have already used unmanned aircraft for tasks such as building inspection, with a new tranche in early 2026 expanding into unmanned aircraft systems, traffic and fleet management, cross-boundary corridors and passenger carrying trials. These initiatives lay the foundations for vertiport networks, urban air logistics and cross boundary air taxi services. The next phase must prioritise scalable infrastructure, robust data and safety standards and targeted public private partnerships to turn trials into commercially viable, city-wide services."

Boosting retail with “Made in Hong Kong”

Deloitte China Hong Kong Consumer Markets Business Leader Michael Cheng says, "We welcome the government's continued commitment to supporting Hong Kong's consumer and retail market. The allocation of HKD1.66 billion in the Budget to the Hong Kong Tourism Board, representing a 35% increase from 2025, together with a further allocation of HKD100 million to a pilot scheme to attract international exhibitions to Hong Kong, will help stimulate visitor arrivals and boost consumer spending; together with market access opportunities for local consumer brands, thereby enhancing overall economic activities. In addition, we note that the government's continued efforts to support the growth of 'Made in Hong Kong' food and beverage (F&B) businesses by leveraging Hong Kong's strong reputation of F&B quality to expand into the mainland and international markets.

"We believe the Centre for Food Safety's two-year waiver of food product certification fees will help reduce costs for related businesses. The introduction of a unified brand for local agricultural and fisheries products, supported by certification, testing and traceability mechanisms, will further enhance the competitiveness and market recognition of Hong Kong food products."

Supporting enterprises go global and Northern Metropolis development

Deloitte China Hong Kong Government & Public Services Industry Leader Gary Wu says, "The Budget leverages Hong Kong's unique competitiveness to enhance flows of transport, logistics, funding, talent, and investment from the Chinese Mainland and worldwide into Hong Kong, reinforcing its role as a 'super connector' and 'super value-adder' to support mainland enterprises going global. Among the more innovative measures are policies and tax incentives aimed at facilitating international expansion, including the government's plan to announce a series of enhancements by mid-year, such as providing additional tax concessions and flexibility for CTCs and their affiliates and introducing a pre-approval mechanism. Together with the incentive package proposed in the Policy Address to promote industry and investment, these measures will further attract enterprises to establish in Hong Kong."

Deloitte China Strategy and Economic Advisory Partner Alvis Kong adds, "The Budget adopts an 'industry-oriented' development model for the Northern Metropolis, encompassing three key dimensions—institutional framework, funding and industry—to accelerate the transformation of the Northern Metropolis from a planning blueprint into tangible construction. The government will submit a dedicated legislative bill for the Northern Metropolis within the year and establish two special purpose companies, focusing respectively on the San Tin Technopole and Hung Shui Kiu Industrial Park. These dedicated entities will expedite development, underscoring the government's commitment to advancing the Northern Metropolis through institutional innovation.

"In terms of funding arrangements, the government will reallocate HKD150 billion to support the Northern Metropolis and related infrastructure, providing robust fiscal backing. In addition, the government will seek approval from the Legislative Council for a HKD10 billion capital injection into the Industrial Park company to accelerate the development of the remaining land parcels in Phase One and will establish a venture capital fund to support start-up enterprises."