Hong Kong Budget 2026–27 introduces targeted support for SMEs through a 100% profits tax rebate capped at HK$3,000. It gives continued access to the SME Financing Guarantee Scheme (SFGS) 80% guarantee product, extended until March 2028. Together, these measures aim to ease cash-flow pressure while helping businesses adapt to rising costs and evolving market conditions.
Built around the theme of “Helping businesses grow through technology and finance”, the Hong Kong budget 2026–2027 for SMEs focuses on practical assistance rather than large-scale stimulus.
Hong Kong’s fiscal reserves are projected to remain strong at around HK$657.2 billion, while the government expects an overall budget surplus of about HK$22.1 billion for 2026–27.
For many companies, the business tax relief measures in the Hong Kong Budget act as a cushion against short-term financial pressure. The goal is to help SMEs maintain liquidity while gradually investing in technology, innovation, and operational efficiency as the economy continues to adjust.
This year’s plan will be around 3 simple pillars:
- Liquidity: Tax relief and financing support designed to help SMEs manage cash flow and maintain access to credit.
- Innovation and digital transformation: Policy initiatives encouraging AI adoption, innovation investment, and technology upgrades.
- Targeted operational relief: Measures that lower everyday business costs (tax adjustments and property rate concessions).
Let’s take a closer look at what these mean for businesses.
Direct Financial Relief: The 100% Profits Tax Rebate
One of the headline relief measures in the Hong Kong Budget 2026–27 for SMEs and individuals is a 100% tax rebate for the year of assessment 2025–26. This measure is split across two primary categories:
- Profits Tax Rebate: A 100% reduction for businesses, capped at HK$3,000 per case.
- Salaries Tax & Personal Assessment: A 100% reduction for individuals, also subject to a HK$3,000 ceiling.
Impact and Scope
Although the rebate amount remains modest compared with the larger concessions seen in earlier years, it still provides immediate relief for small and medium-sized enterprises managing rising operating costs. The government estimates the measure will benefit around 171,000 businesses and reduce government revenue by about HK$500 million.
Strategic Context
Compared with the HK$1,500 cap introduced in the previous budget, the higher ceiling provides slightly stronger relief for SMEs while still keeping the overall fiscal cost relatively limited.
As Financial Secretary Paul Chan Mo-po noted in the budget speech, “While it is essential to strictly contain public expenditure, the government must proceed with caution to balance the various impacts that may arise.”
Expert tip: Our Hong Kong tax specialists note that even though the profits tax rebate provides immediate relief, SMEs investing in R&D, automation, or digital technology may benefit from enhanced tax deductions and government innovation funding, which offer better long-term savings.
Securing Capital: SFGS Extensions (The “Liquidity Lifeline”)
In addition to the business tax relief Hong Kong 2027, the SME Financing Guarantee Scheme (SFGS) continues to provide practical liquidity tools for businesses that need working capital. To support these extensions, the government also increased the scheme’s total loan guarantee commitment by HK$20 billion to HK$310 billion, expanding the programme’s capacity to back additional SME loans.
Continued SME loan guarantee support
The 80% Guarantee Product, extended until March 2028 under the SME Financing Guarantee Scheme, gives businesses more time to apply for loans that are largely backed by the government. Meanwhile, the 90% Guarantee Product remains available until March 2026, continuing to support smaller firms that require higher risk-sharing from the government.
Principal moratorium: breathing room for cash flow
SMEs can also apply for a 12-month principal moratorium, which is applicable until mid-November 2026, allowing businesses to pay interest only while pausing principal repayments. The Chinese General Chamber of Commerce also welcomed the improved SME support, noting that extending the SFGS and increasing loan commitments would provide a “vital safety net for businesses navigating a challenging environment.”
Why do policymakers call it a “liquidity lifeline”?
Hong Kong has nearly 360,000 SMEs, and policymakers say the extended guarantees play a key role in stabilizing employment and cash flow for businesses during economic restructuring. As HKMA’s Colin Pou said, the programme has already benefited around 25,000 enterprises and 400,000 employees, highlighting its scale beyond simple business tax relief in Hong Kong 2026.
Operational insight: Across recent SME financing discussions, we’ve seen roughly 6 out of 10 businesses use the extended 80% guarantee primarily for refinancing and repayment flexibility rather than new expansion loans.
Actionable tip: How to talk to your bank today?
Instead of waiting for renewal notices, you should proactively contact participating lenders and ask 3 specific questions:
- Whether your existing loan qualifies for the principal moratorium extension.
- Refinancing into the 80% guarantee product could extend your repayment terms.
- What fee subsidies or guarantee-fee concessions are still available before programme deadlines?
Scaling Digitally: The “E-commerce Express” and BUD Fund
The Hong Kong Budget 2026–27 introduces updates to the Branding, Upgrading and Domestic Sales (BUD) Fund to help SMEs expand into new markets and adopt digital tools.
The government will inject HK$200 million into the BUD Fund, providing additional resources to support businesses pursuing branding, upgrading, and market expansion initiatives. The budget also raises the funding ceiling of the simplified “Easy BUD” programme to HK$150,000 per application, allowing SMEs to access funding more quickly for smaller projects.
Through the Hong Kong Trade Development Council HKTDC E-commerce Express programme for SMEs, businesses can also receive advisory support, training, and mentorship to expand into Mainland China’s digital marketplaces and global online platforms.
To further support international expansion, the government will launch a pilot scheme through the Hong Kong Export Credit Insurance Corporation (HKECIC) to help SMEs export to higher-risk markets.
The budget also introduces a 2-year waiver on certification fees charged by the Centre for Food Safety for food export certificates. This will help reduce compliance costs for businesses that export food products.
Operational insight: Based on our experience managing SME funding applications in 2025, Easy BUD submissions were processed roughly 20–30% faster than standard applications, particularly for projects focused on e-commerce upgrades or export digitalization.
Understanding the BUD Fund injection 2027 requirements, such as eligibility criteria and faster approval routes, can help SMEs prepare stronger applications for branding, digitalization, and export expansion.
Analysts say that the budget’s support for SMEs, including the additional BUD Fund injection, will strengthen business competitiveness through innovation and export expansion. As a policy analyst noted, the budget emphasizes “Advancing long-term capability building and positioning Hong Kong to capture new opportunities.”
AI Institute: Why even non-tech SMEs should pay attention
The Hong Kong Budget 2026–27 for SMEs also shows progress under the government’s HK$3 billion AI Subsidy Scheme, which supports research and industry applications in artificial intelligence.
The programme has already approved around 30 R&D projects, covering areas such as large language models, biomedicine, and new materials.
This is important even for traditional industries. As AI tools continue to grow, businesses across manufacturing, logistics, retail, and services can use them to automate tasks, better understand their data, and run operations more smoothly. Over time, this can help companies become more efficient and stay competitive.
Managing Overhead: Rates Concessions
The rates concession for non-domestic properties in Hong Kong is another measure that helps businesses manage everyday operating costs, particularly SMEs dealing with commercial rent and property overhead.
What the concession actually includes
For the first two quarters of 2026–27, the government will provide a rate concession capped at HK$500 per rateable non-domestic property/ quarter.
This means eligible businesses can receive up to HK$1,000 in total relief across the first half of the fiscal year.
The measure is expected to benefit about 440,000 non-domestic properties, with the government forgoing around HK$400 million in revenue to support commercial premises.
If the quarterly rates payable are HK$500 or less, the government waives the full amount. If the rates exceed HK$500, the bill is reduced by HK$500 for that quarter.
Why does this matter operationally?
From a cash-flow perspective, the concession provides modest but immediate relief. Government estimates indicate that around 12% of ratepayers will not need to pay any rates in the first two quarters of 2026–27, as their quarterly rates fall below the concession ceiling.
Operational insight: Many SMEs we work with treat rate concessions as a short-term liquidity buffer, often redirecting savings toward payroll or software subscriptions during slower quarters.
Comparison Table: Hong Kong Budget 2026–27 Support Measures
The comparison table below gives you a quick operational view of what has actually changed between the two policy cycles:
| Support category | 2025/26 status (Previous) | 2026/27 update (Current) | Business impact |
|---|---|---|---|
| Profits tax rebate | 100% rebate (Cap: HK$1,500) | 100% rebate (Cap: HK$3,000) | Smaller direct savings; signals change toward grants and structural support. |
| SFGS 80% guarantee | Further extended to March 2028 | No further extension | Longer credit runway and more stable access to bank financing. |
| SFGS 90% guarantee | Extended to Mar 2026 | No further extension | Critical liquidity for newer or higher-risk SMEs. |
| Principal moratorium | Extended to 17 November 2026 | No further extension | Allows interest-only payments to save short-term cash flow. |
| BUD fund injection | New HK$1.5 billion injection into BUD and export funds | HK$200M injection into BUD Fund + Easy BUD cap raised to HK$150K | Faster approvals and more support for Mainland and ASEAN expansion. |
| Property stamp duty (base value) | HK$100 rate extended up to HK$4 million | No change | Lowers entry cost for SMEs purchasing smaller office or retail units. |
Strategic Outlook: Positioning for the GBA
The incentives in this year’s budget support Hong Kong’s bigger plan within the Greater Bay Area (GBA). In simple terms, the idea is to make Hong Kong a starting point for businesses looking to grow across the region, while ASEAN markets become the next main area of expansion.
ASEAN expansion: Why Hong Kong is the base
73% of GBA enterprises are planning to expand into ASEAN markets. Many of them are using Hong Kong as their base to manage cross-border trade, finance, and professional services. Also, 98% of companies intend to maintain or expand ASEAN operations, showing how regional diversification has become a core strategy amid supply-chain shifts.
As HKTDC research leaders noted, Hong Kong’s “superconnector” role enables firms to leverage its financial and logistics ecosystem to scale internationally, a key reason many GBA businesses still route their expansion through the city.
Why the “AI+ initiative” matters beyond tech startups
Hong Kong’s push into applied AI, called the “AI+ initiative,” embeds artificial intelligence across industries rather than limiting it to software firms.
This indicates that even traditional SMEs will benefit from automation tools and smarter analytics workflows. The Hong Kong Budget 2026–27 for SMEs introduces a new Committee on AI+ and Industry Development Strategy to accelerate the integration of artificial intelligence across industries.
The committee will bring together experts, enterprises, academics, and companies from industry parks to formulate strategies that support the adoption of AI technologies and create favourable conditions for AI-driven industrial transformation. The initiative will now focus on embodied AI and life and health technology.
GreenTech Hub positioning: The sustainability advantage
The GBA strategy also places heavy emphasis on green finance and sustainability. 83% of GBA enterprises already run green initiatives, and more than 90% plan to increase or maintain ESG spending, with Hong Kong rated highly for sustainable development services.
This is where the city’s “GreenTech Hub” positioning makes the real difference. By using green finance, ESG advisory, and cross-border trade infrastructure, Hong Kong favors founders in building climate-focused or efficiency-driven businesses, particularly those targeting ASEAN markets, where sustainability investment is rising.
Your 2026–27 Growth Checklist
Before the year moves too quickly, here are a few practical steps you can take to make the most of the latest support measures:
- Review your YA 2025/26 tax filing: Make sure the 100% profits tax rebate (capped at HK$3,000) reflects correctly without any mistakes.
- Plan financing early: If you rely on bank credit, reassess your funding needs now, especially given that the SFGS 90% Guarantee ends in March 2026 and the 80% product extends to March 2028.
- Explore cross-border e-commerce: Consider booking a one-on-one consultation through HKTDC’s E-commerce programmes to evaluate Mainland China expansion opportunities.
Not sure where to begin? Reviewing your company structure, filings, and tax position with Startupr can help you stay compliant while maximizing available relief and support schemes. Get in touch for more details.
