Other BriefingsIncentive Schemes for Companies in Hong Kong
Companies in Hong Kong can benefit from a myriad of government support and funding schemes. They include funding programs to boost business competitiveness, support research and innovation, cultivate talent, and nurture startups. We offer an introduction to the various government funding schemes and other incentive policies available for companies in Hong Kong.
Hong Kong’s long history of pro-business policies and tax environment continues to make it a magnet for global businesses and investors. In addition to providing a business and investment-friendly environment, the city offers a range of government funding schemes aimed at fostering business growth and innovation.
In recent years, many of these government funding schemes have focused on developing strategic sectors, such as technology research and development (R&D), as well as supporting the growth of small and medium-sized enterprises and startups.
In this article, we provide an overview of some of the government funding schemes and incentive policies currently available to companies in Hong Kong.
Government funding schemes for marketing and business development
BUD Fund
In 2012, the Hong Kong government set up the “Dedicated Fund on Branding, Upgrading and Domestic Sales” (“the BUD Fund“) to help Hong Kong-based companies seize opportunities in the Chinese mainland.
The fund was expanded in 2018 to cover the 10 countries in the Association of Southeast Asian Nations (ASEAN) (Singapore, Indonesia, Malaysia, Myanmar, Thailand, Cambodia, Laos, Vietnam, Brunei, and the Philippines).
Between 2021 and 2023, the fund has been further expanded to include all countries that have signed an Investment Promotion and Protection Agreements (IPPAs) or Free Trade Agreement (FTA) with Hong Kong. Hong Kong currently has 23 IPPAs in place covering 32 countries and regions, as well as eight FTAs. This means the BUD Fund is now applicable to 37 economies, in addition to the Chinese mainland.
In 2023, the BUD Fund launched “Easy BUD”, a streamlined online application mechanism for SMEs. Under the Easy BUD fund, the application procedures take around 30 days – half the time of the usual procedures.
The Easy BUD scheme matches funding for eligible projects, meaning companies can receive 50 percent of the funding required from the government, capped at HK$100,000 (US$12,803) per application. The cumulative funding ceiling for each company under the BUD Fund is HK$7 million (US$896,218), and funding is limited to a maximum of 70 approved projects for each company.
Private companies that are registered under the Business Registration Ordinance with “substantive business operations” in Hong Kong are eligible to apply.
Eligible projects under Easy BUD fall into the following broad categories:
- Design and production of promotional materials
- Advertising
- Participating in exhibitions and related expenditures
- Establishing and optimizing company web pages
- Mobile application for promotional purposes
- Testing and certification services
- Applying for product patent, trademark registration, or copyright protection
SME Export Marketing Fund
As with the BUD Fund, the SME Export Marketing Fund (“EMF”) was set up to assist SMEs based in Hong Kong to expand to overseas markets.
The EMF is a government funding scheme that helps companies carry out “export promotion activities” through a variety of mediums, including attending exhibitions in Hong Kong and overseas, conducting business missions, engaging in various advertising and promotion activities, and setting up or upgrading web pages and mobile applications. See the full list of activities here.
The activities must all target overseas markets. However, between April 30, 2021, and June 30, 2026, the eligible activities have been further expanded to large-scale exhibitions targeting the local Hong Kong market as well. Some larger companies may also be eligible to apply during this period.
A full list of the eligible local-focused events can be found here.
Under the EMF, companies can be reimbursed 50 percent of the approved expenditures required for the activities, up to HK$100,000 per application. Each company can receive up to HK$1 million (US$128,031) in funding. For projects related to establishing or upgrading company websites or mobile applications, the cumulative funding cannot exceed 50 percent of the total expenditure.
Innovation and Technology Fund
Hong Kong’s Innovation and Technology Fund (ITF) is a government funding scheme under the Innovation and Technology Commission (ITC) that provides funding for companies for a wide range of activities related to technology and R&D.
There are a wide range of funding programs under the ITF, broadly aimed at:
- Supporting R&D;
- Facilitating technology adoption;
- Nurturing technology talent;
- Supporting technology startups; and
- Fostering an innovation and technology (I&T) culture.
Government funding schemes to support R&D
The ITF provides a range of funding programs aimed at encouraging local research and development (R&D). The various programs are available to a wide range of applicants, including R&D centers, local public research institutes, and locally-registered companies.
Below we have listed a sample of the R&D funding programs available (excluding university-exclusive programs).
| ITF Funding Programs for R&D | |||
| Program | Scope of activity | Funding | Eligibility |
| Innovation and Technology Support Programme (ITSP)
|
|
Up to HK$2.8 million (US$358,487) for R&D centers; up to HK$$1.4 million (US$179,244) for other applicants.
Maximum 24 months project duration for platform projects and 18 months for seed projects.
|
Lead applicant: R&D center or designated local public research institute.
Minimum 10% industry sponsorship required for platform projects. |
| Mainland-Hong Kong Joint Funding Scheme (MHKJFS)
|
Platform and collaborative R&D projects with Mainland and Hong Kong cooperation.
Specific project themes eligible for application are released each year (in 2023, they were biotechnology, artificial intelligence, and new materials).
|
Maximum 24 months project duration. |
Lead applicant: R&D center or designated local public research institute.
Co-applicant for collaborative projects: A company incorporated in Hong Kong, an industry support organization, a trade and industry association, or a professional body with the legal capacity to enter into contracts.
Minimum 10% industry sponsorship required for platform projects; minimum 50% required for collaborative projects. |
| Enterprise Support Scheme (ESS)
|
In-house R&D work (benefit sharing of commercialized R&D results not required) | Dollar-for-dollar matched funding, up to HK$10 million (US$1.28 million) per approved project.
Maximum 24 months project duration. |
Companies incorporated in Hong Kong (must have a current business registration certificate)
Cannot be a government-subvented organization or a subsidiary thereof. |
| R&D Cash Rebate Scheme (CRS) | Available for two types of applied R&D projects:
For Partnership projects, the following types of work or activities are ineligible:
|
Cash rebate equivalent to 40% of a local enterprise’s eligible expenditure. | Companies incorporated in Hong Kong.
Cannot be a government-subvented organization or a subsidiary thereof. |
| Source: Innovation and Technology Fund, Hong Kong Innovation and Technology Commission | |||
Government funding schemes for technology adoption
The technology adoption funding schemes aim to promote the adoption of technology by local companies and the public sector.
The Technology Voucher Program (TVP) is particularly popular due to its broad scope of eligibility and is particularly helpful for SMEs, who can use the funds to upgrade or launch new IT systems, for instance.
| ITF Funding Programs for Technology Adoption | |||
| Program | Scope of activity | Funding | Eligibility |
| Technology Voucher Program (TVP) | Using technological services and solutions to improve productivity; upgrade or transform business processes. | Funding provided on a 3:1 government-to-company matching basis.
Cumulative funding ceiling of HK$600,000 (US$76,819) per company.
Each company can apply for funding for up to 6 projects.
Projects should generally be completed within 12 months. |
Non-listed companies registered or incorporated and registered in Hong Kong, with substantive business operations in Hong Kong.
Cannot be a government-subvented organization or a subsidiary thereof. |
| New Industrialisation Funding Scheme (NIFS)
|
Subsidizing manufacturers to set up new smart production lines in Hong Kong.
All or a significant portion of the production line for which the company is applying for funding should fulfill the “smart manufacturing” criteria.
Funding covers expenses directly related to the establishment of the new production line in Hong Kong.
|
Funding provided on a 1:2 government-to-company matching basis.
Funding ceiling of one-third of the total approved project cost, up to HK$15 million (US$1.92 million) per project.
Normally maximum of 24 months project duration.
|
Companies incorporated in Hong Kong. |
| Public Sector Trial Scheme – ITF Projects (PSTS-ITF)
|
Completed ITF R&D projects undertaken by R&D centers and designated local public research institutes. | Funding of up to 50% of the actual cost of the original R&D project; up to 100% for projects initiated by R&D centers.
Maximum 24 months project duration. |
Lead application: R&D center or designated local public research institute; or the company owning the IP of the project deliverables. |
| Source: Innovation and Technology Fund, Hong Kong Innovation and Technology Commission | |||
Government funding schemes to nurture technology talent
The ITF funding programs for nurturing technology talent seek to assist local talent in gaining useful experience and help companies recruit and train technology employees.
The programs include both funded internship schemes for locally enrolled students, as well as the employment of skilled talent and training.
| ITF Funding Programs for Nurturing Technology Talent | |||
| Program | Scope of activity | Funding | Eligibility |
| New Industrialisation and Technology Training Programme (NITTP) | Training for staff in advanced technologies, especially those related to “New Industrialisation”.
Both local and non-local training courses. Course providers must have two or more years of relevant experience. |
Funding provided on a 2:1 government-to-company matching basis.
Funding ceiling of HK$500,000 (US$640,156) per year.
|
Companies registered in Hong Kong.
Nominated employees must be Hong Kong permanent residents with relevant background/experience. |
| STEM Internship Scheme
|
Providing STEM students with innovation and technology (I&T)-related work experience during their studies.
Newly created or existing in-house internship programs of the companies, with a duration of at least 28 days offering meaningful I&T-related work.
Definition of I&T-related work is broad, and must contain actual I&T elements (e.g. technology-related intellectual property work, digital marketing, data analysis for the manufacturing industry, etc.) |
Allowance of HK$11,190 (US$1,433) for each student per month with effect from 1 April 2023.
At least 28 calendar days with a maximum of 90 days in each academic year.
Funding is reimbursed by the ITC. |
All companies.
Both local and non-local students undergraduates and postgraduates majoring in full-time eligible STEM-related programs at designated local universities, including the campuses established in the GBA, the five government-funded R&D centers, and HKPC. |
| Research Talent Hub for Technology Companies Conducting R&D Activities in Hong Kong (RTH-TC)
|
Funding support for technology companies conducting or planning to conduct research and development (R&D) activities in Hong Kong to engage research talents to conduct R&D work. | Maximum monthly salary of HK$20,000 (US$2,561) for talents with a bachelor’s degree, HK$23,000 (US$2,945) for talents with a master’s degree, and HK$35,000 (US$4,481) for talents with a doctoral degree.
Additional HK$10,000 (US$1,280) monthly living allowance provided for talents with doctoral degrees.
Maximum employment duration of 36 months.
Each company can apply for up to 4 talents. |
Company must be registered or registered and incorporated in Hong Kong with substantive business operations in Hong Kong,
conducting or planning to conduct R&D activities in Hong Kong.
Company cannot be a government-subvented organization or a subsidiary thereof.
Talent must be legally permitted to work in Hong Kong during the employment period and hold a bachelor, master, or doctoral degree from, a local university or a well-recognized non-local institution, or jointly awarded by a local and non-local university, in a STEM-related discipline. |
| Source: Innovation and Technology Fund, Hong Kong Innovation and Technology Commission | |||
Government funding schemes for startups
Several ITF schemes provide direct funding to Hong Kong-based startups. These include a co-investment scheme to attract venture capital (VC) investment in local startups and a university funding scheme to help students and faculty set up new businesses.
Note that the Innovation and Venture Fund (ITVF) is aimed only at local startups, with participation from selected VC funds.
Meanwhile, the Research, Academic and Industry Sectors One-plus Scheme (RAISe+) funding is provided through one of the six universities. While the applicants must be affiliated with one of these six universities, the program is open to both local and foreign faculty and students.
| ITF Funding Programs for Supporting Technology Startups | |||
| Program | Scope of activity | Funding | Eligibility |
| Innovation and Technology Venture Fund (ITVF)
|
HK$2 billion (US$256 million) fund for co-investing with selected VC funds in eligible local I&T startups. | Co-investment at a 1:2 ITVF-VC fund matching ratio.
Aggregate matching investment ceiling of HK$400 million (US$51.2 million);
Aggregate investment ceiling in a startup of HK$50 million (US$6.4 million);
Matching investment for each co-investment in a startup may constitute no more than 40% of the original total target investment amount sought, up to HK$30 million (US$3.84 million) |
Target startup or its wholly-owned Hong Kong company must:
|
| Research, Academic and Industry Sectors One-plus Scheme (RAISe+)
|
Funding to six universities to support teams of faculty and students to start technology businesses and commercialize their R&D results (TSSSU-O).
Dollar-to-dollar matching funds for startups with demonstrable growth potential through securing investment from the private sector (TSSSU+).
The six universities are: City University of Hong Kong, Hong Kong Baptist University, The Chinese University of Hong Kong, the Hong Kong Polytechnic University, The Hong Kong University of Science and Technology, and the University of Hong Kong |
Annual funding of up to HK$16 million is provided for each of the six universities, split evenly between the TSSSU-O and TSSSU+ programs.
Maximum of HK$1.5 million (US$2 million) for each technology startup per year for up to three years under each program.
|
Technology startups must have been registered in Hong Kong for less than two years (for TSSSU-O) or less than seven years (for TSSSU+) at the time of application.
The startup team may be composed of undergraduates, postgraduates or alumni, and/or professors or other faculty members serving as consultants providing R&D technical expertise and direction.
For TSSSU+ applications, the private investment amount secured during the matching period must be no less than the funding amount applied for. |
| Source: Innovation and Technology Fund, Hong Kong Innovation and Technology Commission | |||
Fostering I&T culture
The final category of the ITF programs provides funding to support non-R&D projects that still contribute to Hong Kong’s overall I&T industry and culture.
The funds include a sponsorship scheme to support non-profits and companies in Hong Kong to engage in various activities related to I&T education and culture, as well as funding support for first-time patent applicants.
| ITF Funding Programs for Fostering I&T Culture | |||
| Program | Scope of activity | Funding | Eligibility |
| General Support Programme (GSP)
|
Support non-R&D projects that contribute to the upgrading and development of Hong Kong’s industries, the fostering of I&T culture in Hong Kong, and promoting popular science | Sponsorship of at least 10% of the total project cost, up to:
|
Applicant must be one of the following located in Hong Kong:
|
| Patent Application Grant (PAG)
|
Funding support for local companies and inventors to patent their intellectual work.
Available to applications for functional patents and inventions with technology elements and susceptible to industrial application. |
90% of the sum of the total direct costs of the patent application, up to HK$250,000 (US$32,008).
|
All locally incorporated companies, Hong Kong permanent residents, or Hong Kong residents permitted to remain in Hong Kong for at least 7 years.
Must have no prior patent ownership in any country/territory, and must not have previously received PAG funding. |
| Source: Innovation and Technology Fund, Hong Kong Innovation and Technology Commission | |||
SME Financing Guarantee Scheme
The SME Financing Guarantee Scheme is a loan matching scheme carried out by the Hong Kong Mortgage Corporation Limited Insurance Limited (“HKMCI”), a wholly-owned subsidiary of the Hong Kong Mortgage Corporation Limited (HKMC).
The scheme helps SMEs and non-listed companies receive financing from approved participating lenders to meet business needs.
The HKMCI currency provides guarantee coverage ranging from 50 to 100 percent credit facilities of eligible companies. Initially only providing 50 percent, 60, percent, or 70 percent coverage guarantees, the scheme was expanded to provide 80 percent, 90 percent, and 100 percent guarantee products, although these were set to expire in 2023.
Hong Kong’s 2023-2024 Budget then extended the 80/90/100 percent coverage guarantee until the end of March 2024. The 50/60/70 percent guarantee products will continue to be in place after this date.
No matter which guarantee product a company is applying for, it must meet the following minimum criteria:
- Be a company, sole proprietorship, partnership, or unincorporated body of persons that is registered in and has business operations in Hong Kong;
- Does not be carry on the business of a lender or otherwise provide funds available for borrowing in any way;
- Not be an affiliate of the lender, and not be a listed company or corporation.
The permitted use of the facility, funding periods, amounts, and repayment terms of the various guarantee products are listed below.
| SME Financing Guarantee Scheme | ||||
| Coverage | Permitted use of facility | Maximum guarantee period | Maximum funding facility | Repayment terms |
| 50/60/70% Guarantee Products |
|
5 years | HK$12 million (US$1.5 million) | Repaid in installments and fully amortized by the end of the guarantee period; the period between each repayment of principal should not exceed 3 months.
The lender may allow the company to pay interest only in the first 6 months from the facility starting date upon request. |
| 80% Guarantee Product | 5 – 7 years | HK$18 million (US$2.3 million) | ||
| 90% Guarantee Product | 5 years | HKD8,000,000 | Repaid in installments and fully amortized by the end of the guarantee Period; the period between each repayment of principal should not exceed 3 months.
The lender may allow the company to pay interest only in the first 12 months from the facility’s starting date upon request. |
|
| Special 100% Loan Guarantee |
|
10 years | HKD9,000,000 | Repaid in monthly installments and fully amortized by the end of the guarantee period.
The lender may allow the company to pay interest only in the first 12 months from the facility’s starting date upon request. |
| Note: Further conditions apply. Refer to HKMC for more details. Source: The Hong Kong Mortgage Corporation Limited |
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For more information and assistance with Hong Kong’s government funding schemes, as well as help with company incorporation, market-entry, tax advisory, accounting, and other business and investment advisory services in Hong Kong, don’t hesitate to reach out to our team by emailing hongkong@dezshira.com.
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