The Hong Kong Special Administrative Region is likely to post a budget surplus of HK$500 million ($6.4 million) for the 2025/26 fiscal year, as stronger‑than‑expected stamp duty revenues from robust equity market activities have lifted government income, according to estimates by Deloitte.

The firm on Thursday unveiled its recommendations for the HKSAR government’s 2026/27 budget, and projected higher operating income and investment returns for the current fiscal year despite sluggish land-sale proceeds.

Anthony Lau, a tax and business advisory leader at Deloitte China, said the city’s public finances are now on a firmer footing, citing an economic resurgence that has seen the property market recover and investment sentiment significantly improve.

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“Fiscal reserves are projected to reach HK$654.8 billion by the end of March 2026, equivalent to around 10 months of government expenditure,” he said.

Deloitte also suggested that the government roll out new tax incentives and relax certain tax policies in order to lure overseas firms to list on the Hong Kong Stock Exchange, encourage more Chinese mainland companies to set up corporate treasury centers here, and attract innovation and technology firms to the Northern Metropolis.

Meanwhile, to ease the public’s burden amid persistent inflation, the firm called for a one-off tax waiver capped at HK$5,000 on salaries tax and tax under personal assessment, plus a 10 percent increase in personal allowances starting next fiscal year.

Polly Wan, lead partner of Deloitte China’s Hong Kong budget team, said the proposed tax relief and new incentives would dent government revenues.

“But we hope these measures will draw more enterprises to the city, boosting different sectors, especially innovation and technology,” she said. “If we want to tap the sector’s potential, we need to invest first to earn returns.”

In last February’s budget, Financial Secretary Paul Chan Mo-po predicted a deficit of HK$67 billion for 2025/26. He will present the 2026/27 budget and update the revised estimates for 2025/26 on Feb 25, 2026.

PwC on Monday projected a consolidated budget deficit of HK$200 million for the current fiscal year, while the Association of Chartered Certified Accountants Hong Kong earlier anticipated a surplus of HK$4.1 billion.

Contact the writer at gabylin@chinadailyhk.com