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From accelerating AI adoption to nurturing homegrown talent, attracting global professionals, and rolling out financial relief for residents and businesses – discover the key measures unveiled in this year’s Budget.
Hong Kong's Financial Secretary Paul Chan delivered the 2026-2027 Budget at the Legislative Council today (25 February 2025, Wednesday).
In a recent blog post, Chan noted that Hong Kong's economy has had a good start this year, following sustained growth last year. However, with the external environment remaining volatile and the city continuing its economic transformation, he emphasised the importance of prudent fiscal management. This includes balancing short-, medium-, and long-term needs of society while maintaining sufficient reserves to navigate unexpected challenges.
This year’s Budget features a purple cover – a colour Chan said symbolises Hong Kong’s continuous effort to strengthen its internal economic momentum amidst a rapidly evolving global landscape.
Read on for the key policies and highlights HR leaders, employers, and employees should take note of.
Promoting wider AI application
As AI continues to accelerate industrial transformation – with new technologies, industries, and products rapidly emerging – Chan announced that he will establish and chair the Committee on AI+ and Industry Development Strategy to formulate strategies and create favourable conditions for AI to empower the transformation and development of industries.
In the initial phase, the Committee will focus on life and health technology and embodied AI.
Meanwhile, the Government aims to encourage wider AI application across all sectors, thereby achieving the target of citywide adoption and utilisation.
Key measures include:
- Allocating HK$50mn for public organisations, in collaboration with technology enterprises and tertiary institutions, to organise AI application courses, seminars, and competitions for students, young people, and members of the public, enhancing their AI awareness, application skills, and responsible use of AI.
- In the 2025/26 to 2027/28 triennium, the University Grants Committee (UGC)-funded universities will introduce a total of 27 undergraduate programmes related to STEAM, including AI, creative industries, data science, etc.
- For self-financing post-secondary institutions, AI-related programmes will be given priority to be included in the Study Subsidy Scheme for Designated Professions/Sectors starting from 2027/28 academic year.
- The Vocational Training Council (VTC) will include AI application in the compulsory modules on Information Technology for all of its Higher Diploma programmes.
- The Employees Retraining Board (ERB) will be upgraded as Upskill Hong Kong, providing various types of skill-based training courses, including AI application, thereby enhancing the competitiveness of the local workforce.
- The Quality Education Fund has earmarked HK$2bn to take forward digital education in primary and secondary schools by offering school-based AI education programmes and subsidising students to participate in related activities. AI training will also be provided to teachers.
Various government departments are also proactively leveraging AI and related technologies to promote digital intelligence for enhancing the standard of public services. For example, the Labour Department will utilise AI to optimise job matching to provide better services for job seekers and employers.
The Government has set up the AI Efficacy Enhancement Team to coordinate and steer government departments to apply AI. It will allocate HK$100mn for introducing leading technologies from the industry to accelerate digital intelligence transformation of the Government.
Meanwhile, the Civil Service College will collaborate with the Digital Policy Office to provide AI training for civil servants.
Accelerating new industrialisation and I&T development
Chan highlighted that the Government is actively steering local manufacturers towards smart manufacturing, which leverages technologies such as Internet of Things, real-time data, application of data analytics, advanced human-machine interfaces, and robotics.
This year, the Government will launch the New Industrialisation Elite Enterprises Nurturing Scheme, supporting targeted high-growth enterprises contributing to the development of new industrialisation, with an aim of nurturing emerging and future industry enterprises in Hong Kong.
At the same time, the Government will push for deeper integration between technological innovation and industrial innovation through key infrastructures, including the Hetao Hong Kong Park and San Tin Technopole. According to Chan, efforts are underway to facilitate the convenient flow of personnel, materials, capital, and data between the Shenzhen Park and Hong Kong Park.
Nurturing and attracting talents
Chan emphasised that Hong Kong will continue to nurture local talent, attract global talent, and strengthen its position as an international education hub to achieve the integrated development of "Education, Technology and Talent".
Talent-nurturing measures across key industries:
- I&T: The STEM Internship Scheme will continue encouraging university students to gain I&T-related work experience. The Research Talent Hub will maintain subsidies for institutions to engage STEM graduates for R&D roles.
- Finance: The Hong Kong Academy of Finance is committed to nurturing financial leaders with global vision. The GBA Fintech Two way Internship Scheme for Post secondary Students will keep providing subsidies for students from Hong Kong and the Mainland to participate in short-term internships in fintech companies. The Programme to Enhance Talent Training for the Insurance Sector will be extended for three years to enhance the professional competency of insurance practitioners.
- Legal and dispute resolution: The Hong Kong International Legal Talents Training Academy will continue offering professional practical training. The Academy will continue facilitating experience sharing with legal and dispute resolution practitioners in the Mainland, B&R, and other jurisdictions.
- Aviation: The Hong Kong International Aviation Academy, in partnership with the Chinese University of Hong Kong, will launch a new Master of Science in Aviation Management programme this year. Together with an overseas aeronautic services company, the Academy has also established the Aircraft Engineering Training Centre to offer a range of professional training courses on aircraft maintenance, aircraft parts processing, and certification.
- Construction industry: HK$65mn will be allocated to provide additional government funded training places this year.
The Hong Kong Talent Engage will continue stepping up its efforts to attract talents from the Mainland and overseas, and expanding its network of working partners to help incoming talents and their families settle in Hong Kong.
To reinforce Hong Kong’s role as a major global education centre:
- The Government has earmarked resources to support, on a matching basis, the Hong Kong University of Science and Technology (HKUST) in developing the third medical school, which aims to admit its first cohort of students in the 2028/29 academic year.
- For the development of the Northern Metropolis University Town, three sites in Hung Shui Kiu/Ha Tsuen New Development Area will soon be rolled out for campus development by UGC-funded universities and universities of applied sciences. The Government will also earmark HK$10bn for providing loans to support campus development.
- The Education Bureau (EDB) has established the Task Force on Study in Hong Kong to attract top-notch students globally.
Support for youth, women’s development, and working families
Chan elaborated a series of measures aimed at supporting young people, strengthening women’s development, and enhancing services for working families.
The Government will provide young people with more exchange and internship opportunities in the Mainland and overseas. This includes:
- Introducing a new media thematic internship programme in the Mainland.
- Allocating an additional HK$60mn for implementing the HYAB Funding Scheme for International Youth Exchange continuously.
In addition, around 3,600 short-term internship placements will be offered across government departments and public bodies for post-secondary students, enabling young people aspiring for a public service career to gain experience.
To promote all-round women's development, the Government will increase the annual funding for the Women Empowerment Fund to HK$30mn starting from the next financial year.
To strengthen the support for working families, the total number of service places of aided standalone child care centres has exceeded 1,530 with an increase of about 12% over last year.
Promoting employment
Chan noted that the Re-employment Allowance Pilot Scheme has been well-received. As such, the provision for the scheme will be increased to HK$222mn in the coming financial year.
On the other hand, the Employment Programme for the Elderly and Middle Aged will continue supporting employers in hiring persons aged 40 or above and providing them with on-the-job training. Under the scheme, employers will receive a maximum on-the-job training allowance of HK$5,000 per month for employing each eligible person, for a period ranging from three to 12 months. Additionally, the ERB has launched two new courses dedicated for persons aged 50 or above.
Supporting people and enterprises
To relieve the economic pressure faced by the people and enterprises, Chan announced a series of relief measures covering rates concessions, tax reductions, and enhanced allowances.
Rates concessions for the first two quarters of 2026/27
- Domestic properties: Rates concession capped at HK$500 for each rateable property.
- Non domestic properties: Rates concession capped at HK$500 for each rateable property.
Tax reductions for 2025/26
- Salaries tax and tax under personal assessment will be reduced by 100%, capped at HK$3,000, and reflected in the final tax payable for the year of assessment 2025/26. This measure will benefit about 2.12mn taxpayers.
- Profits tax will be reduced by 100%, capped at HK$3,000, and reflected in the final tax payable for the year of assessment 2025/26. This will benefit about 171,000 businesses.
Proposed adjustments starting from the year of assessment 2026/27
To provide further tax relief to individuals and families, Chan proposed the following three adjustments:
- Basic allowance and single parent allowance increased from HK$132,000 to HK$145,000.
- Married person’s allowance increased from HK$264,000 to HK$290,000.
- Child allowance and additional child allowance increased from HK$130,000 to HK$140,000.
- Allowance for maintaining a dependent parent or grandparent aged 60 or above from HK$50,000 to HK$55,000. The same increase applies to the additional allowance for taxpayers residing with these parents or grandparents.
- Allowance for maintaining a dependent parent or grandparent aged 55 to 59 from HK$25,000 to HK$27,500. The same increase applies to the additional allowance for taxpayers residing with these parents or grandparents.
- Deduction ceiling for elderly residential care expenses raised from HK$100,000 to HK$110,000 for taxpayers whose parents or grandparents are admitted to eligible residential care homes.
Images: Financial Secretary's website / 2026-2027 Budget Live
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