Hong Kong remains a top destination for foreign businesses looking to expand into Asia. With its strategic location and business-friendly environment, it offers unique opportunities for investment and growth. The Dezan Shira & Associates guide to doing business in Hong Kong for 2025-26 provides an in-depth look at the latest changes and essential information for companies entering or operating in the region. From tax measures to legal updates, this guide is a must-read for investors and businesses alike.
Why Hong Kong Continues to Attract Global Investors
Since regaining sovereignty from Britain in 1997, Hong Kong has remained a key gateway to the Chinese Mainland. The city operates under the “One Country, Two Systems” framework, granting it significant autonomy and a distinct legal and economic system compared to Mainland China. This unique setup has allowed Hong Kong to maintain its role as a global financial hub, bolstered by low taxes, a robust legal system, and strong intellectual property protections.
Hong Kong’s prime location, strong financial services sector, and commitment to innovation make it an ideal place for businesses to operate. Additionally, the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) has enhanced Hong Kong’s role as a central business hub for Asia, further strengthening its appeal to foreign investors.
Key Updates in Hong Kong’s Business Environment (2025-26)
The Hong Kong Special Administrative Region (SAR) Government continues to support business growth. In the 2025-26 Budget, new measures were introduced to stimulate economic activity and improve competitiveness. These include tax reductions aimed at easing the financial burden on businesses and promoting further investment in innovation.
The financial services sector is also undergoing a transformation. Efforts to streamline the listing process and improve market structures are expected to make Hong Kong an even more attractive destination for companies looking to go public. These initiatives align with Hong Kong’s continued development as a leading international financial center.
Tax and Legal Updates for 2025-26
The latest edition of Doing Business in Hong Kong includes several significant updates that investors should be aware of.
Tax Reductions
The 2025-26 Budget introduced tax reductions that will benefit both businesses and individuals. Profits tax, salaries tax, and personal assessment tax have all been adjusted for the year of assessment 2024/25. These changes aim to reduce the tax burden and encourage investment.
R&D Tax Deductions
A new section of the guide focuses on enhanced tax deductions for research and development (R&D) activities. This move is designed to encourage more businesses to invest in innovation, supporting Hong Kong’s push to become a global leader in technology and R&D.
Re-Domiciliation Regime
Hong Kong has introduced updates to its re-domiciliation regime, which allows non-Hong Kong companies to transfer their legal identity to the city. This development simplifies the process for businesses wishing to relocate their headquarters to Hong Kong, offering them greater operational flexibility and access to local markets.
Global Minimum Tax and BEPS 2.0
The global minimum tax initiative, part of the Base Erosion and Profit Shifting (BEPS) framework, is gaining momentum. Hong Kong has aligned with these global rules, ensuring that businesses operating in the region comply with international tax standards.
Minimum Wage and Employee Benefits Updates
Effective May 1, 2025, the statutory minimum wage in Hong Kong will increase from HK$40 to HK$42.10 per hour. Additionally, the Legislative Council has approved the abolition of the Mandatory Provident Fund (MPF) offsetting arrangement, which will take effect on the same date. Employers should prepare for these changes, as they will impact payroll and employee benefits systems.
Visa and Investment Admission Changes
For businesses looking to bring talent into Hong Kong, new application and visa fees for talent and capital investment admission schemes have been introduced. These changes are part of the government’s efforts to attract skilled professionals and investors to further boost the local economy.
Hong Kong’s business environment in 2025-26 continues to offer vast opportunities for foreign investors. With a strong legal framework, a pro-business government, and a range of new policies designed to attract investment, Hong Kong remains an ideal location for companies aiming to expand into Asia. Whether you’re considering entering the market for the first time or are looking to stay informed about the latest developments, this guide provides valuable insights into doing business in the city.
