The Hong Kong Institute of Certified Public Accountants (HKICPA) has set out its recommendations for the Hong Kong Government’s budget for 2026–27 fiscal year.

The accounting body has submitted its proposals under the theme ‘Reinforcing and enhancing Hong Kong’s strengths, innovation and talent for a bright and bold future’.

The HKICPA proposes a package of tax and policy measures to enhance Hong Kong’s competitiveness, support growth and strengthen public finances.

To attract investment, it suggests a five-year half-rate profits tax concession (8.25%) on profits for qualifying regional headquarters (RHQs).

It also recommends an additional two-year tax exemption for Chinese mainland enterprises that set up RHQs.

The HKICPA also called for a review of tax incentives for research and development and intellectual property, support for quantum computing, and lighter tax burdens plus digitalisation incentives for small and medium-sized enterprises.

Capital markets proposals include refined tax concessions for single family offices. It also proposed more renminbi-denominated offshore products such as annuities, insurance and financial instruments alongside stronger ‘Brand Hong Kong’ promotion.

Additionally, the institute proposed measures to retain and nurture talent. These include streamlining visa procedures, subsidies for competitive packages and education allowances for children of overseas talent.

It also urged measures to safeguard resilient and sustainable public finances while maintaining a competitive tax system. In addition, it called for stronger support for the community and sustainable development.

The HKICPA estimates that the government will record a budget deficit of around HK$1.4bn ($179m) for 2025–26. Fiscal reserves will reach around HK$652.9bn by the end of March 2026.

The HKICPA said Hong Kong’s financial position remains sound, citing the city’s overall financial strength. It noted that the Exchange Fund managed by the Hong Kong Monetary Authority holds more than HK$4tn in assets, including the fiscal reserves. It also pointed to a deficit-to-gross domestic product (GDP) ratio of around 4.8%.

With the government revising its real GDP growth forecast for 2025 to 3.2%, alongside modest inflation, the HKICPA does not see immediate fiscal risks.

HKICPA president Stephen Law said: “Hong Kong’s economy has remained resilient amid global uncertainties, supported by steady growth in exports, improving domestic demand and a strong capital market performance.”