business · Hkgov

Hong Kong Publishes IP Tax Deduction Bill to Boost Knowledge Industries

Hkgov · 1 SOURCESabout 3 hours ago2 MIN

Summary

The Hong Kong Government published the Inland Revenue (Amendment) (Tax Deductions for Intellectual Property Expenditure) Bill 2026 in the Government Gazette on Friday . The bill expands tax deduction eligibility for capital expenditure on intellectual property, covering purchases of IP rights from associates, IP used by overseas licensees, and upfront licence fees . According to the Commerce and Economic Development Bureau, the amendments aim to lower IP transaction costs, stimulate trading activity, and support knowledge-intensive industries . The proposed changes will apply to contracts entered into on or after April 1, 2026, with the bill scheduled for its first and second readings in the Legislative Council on October 28 .

Key Points

The Inland Revenue (Amendment) (Tax Deductions for Intellectual Property Expenditure) Bill 2026 was published in the Government Gazette on October 16, 2026
The bill enables deductions for capital expenditure when enterprises purchase IP rights from associate companies, removing a previous restriction
Enterprises can now claim deductions for IP rights purchased and subsequently licensed to users located outside Hong Kong
Upfront licence fees paid for the use of intellectual property rights will also qualify for tax deductions under the amended rules
The bill implements measures announced in both the 2025-26 and 2026-27 Budgets, with retroactivity to contracts signed from April 1 this year

Why It Matters

By lowering the financial barriers to IP transactions, the bill positions Hong Kong to attract more intellectual property trading and development activities, reinforcing the city's role as an innovation and technology hub . The retroactive application to April 2026 signals the government's urgency in supporting enterprises amid a competitive regional landscape for knowledge-intensive industries .