Navigating the 2026–27 Budget: Key Opportunities and Support for SMEs

The recently announced 2026–27 Budget focuses on the core theme of "Innovation-driven, Finance-empowered, Diversified Development, and Caring for the People" to steer the economy forward. For Small and Medium Enterprises (SMEs), this budget introduces several targeted financial reliefs and strategic initiatives designed to bolster competitiveness in an increasingly digital global market. Direct Financial Relief and Funding Boosts SMEs can look forward to immediate cost-saving measures and enhanced funding support: • Tax and Rates Relief: A 100% reduction in profits tax for the 2025–26 assessment year is provided, subject to a $3,000 ceiling. Additionally, rates for non-domestic properties will be waived for the first two quarters of 2026–27, capped at $500 per quarter. • "BUD" Fund Expansion: To assist businesses in expanding into outside markets, the government is injecting 200 million into the "BUD" Fund. Notably, the grant ceiling for "EasyBUD" applications is being raised to 150,000 per case. • Industry-Specific Support: For those in the food sector, food safety testing certificate fees will be waived for two years to facilitate market expansion. Empowering SMEs through Technology and AI The budget places a heavy emphasis on AI-driven transformation, which offers SMEs a pathway to modernization: • AI Training and Application: A total of $50 million has been allocated to support AI application learning courses, seminars, and competitions, ensuring the workforce is equipped for a "digital and intelligent" ("数智化") transition. • I&T Guidance: A $10 billion Innovation and Technology (I&T) Industry Guidance Fund will be launched within the year to support emerging industries. • R&D Incentives: The government plans to review and optimise tax arrangements for Research and Development (R&D) expenditures, which could provide significant fiscal space for innovative SMEs. Strategic Growth and Market Expansion Beyond direct subsidies, the budget outlines frameworks to help SMEs scale and protect their assets: • New Industrialisation: The "New Industrialisation Elite Enterprise Cultivation Programme" will be launched this year to provide focused support for high-growth enterprises. • Intellectual Property (IP) Support: To encourage the trade of ideas, the government is proposing tax deductions for capital expenditure on purchasing IP and has reserved $52 million to establish an "Intellectual Property Academy". • Logistics and Trade: The "Future Smart Logistics Accelerator Scheme" will be introduced to promote data interconnectivity, while the Export Credit Insurance Corporation (ECIC) will launch a pilot scheme to help SMEs explore higher-risk new markets. Economic Outlook These measures come at a time when the government predicts a consolidated surplus of $22.1 billion for 2026–27, with fiscal reserves expected to reach $733.7 billion by March 2031. By leveraging these new grants and tax incentives, SMEs can better position themselves to contribute to Hong Kong’s high-quality economic development.