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05 March 2025 Hong Kong announces 2025-26 Budget proposing favorable tax measures for specific sectors
On 26 February 2025, the Financial Secretary of Hong Kong announced the 2025/26 Hong Kong Budget. The key proposed tax measures are highlighted below. A tax deduction is proposed for intellectual-property (IP) related expenditures, including lump sum licensing fees for acquiring the rights to use IP, and related expenses incurred on purchase of IP (or the right to use IP) from associates. One proposal would enhance the preferential tax regimes for privately offered funds, family investment holding vehicles managed by a single-family office, as well as for the distribution of carried interest by private equity funds. It may include expanding the scope of permissible assets to cover immovable property situated outside Hong Kong, emission derivatives/allowances and carbon credits, insurance-linked securities, interests in non-corporate private entities, loans and private credit investments and virtual assets. The 8.25% tax concession would be extended to eligible commodity traders in international maritime business, potentially covering taxpayers that own the cargoes and manage their fleet for cargo delivery. A tax deduction would be provided for ship acquisition costs for ship lessors under an operating lease. The long-awaited relaxation of tax deduction for IP acquisition costs is welcomed. Multinational enterprise (MNE) Groups in the capital management and shipping industries will want to closely follow the development of these proposed enhancements to tax incentive regimes.
Document ID: 2025-0611 | ||||||
