The Inland Revenue (Amendment) (Tax Deductions for Intellectual Property Expenditure) Bill 2026 was published in the Government Gazette today.

The bill aims to relax tax deduction arrangements for capital expenditure incurred by enterprises in purchasing Intellectual Property (IP) rights or licences to use such rights.

The Commerce & Economic Development Bureau said the bill puts into effect a measure announced in the 2025-26 and 2026-27 budgets on enhancing tax deduction arrangements for local IP.

It added that the relaxation will serve to lower the costs of IP transactions, thereby facilitating more IP trading activities, and support the development of knowledge-intensive industries in Hong Kong.

The bill proposes to allow tax deductions for relevant capital expenditure incurred by enterprises in respect of the following: purchases of IP rights from associates; purchases of IP rights which are used by a licensee outside of Hong Kong; and upfront licence fees for the use of IP rights.

The amendments proposed will apply to contracts entered into on or after April 1 this year, either for the purchase of IP rights, or for a licence to use IP rights.

The bill will be introduced in the Legislative Council for first and second readings on October 28.