Hong Kong Plans Tax Deductions for IP Purchases: Franchise Sector Watches Licensing Costs and Training Support

Hong Kong plans to further promote intellectual property (IP) trading, with proposed tax deductions for capital expenditure on IP or rights to use it of particular interest to brand owners and prospective franchisees. According to a report in Hong Kong’s Wen Wei Po on 19 September 2026, Secretary for Commerce and Economic Development Algernon Yau said the government planned to introduce the relevant bill before the end of the year and establish a committee to guide IP trading development. For Hong Kong’s franchise sector, the key issues are the future cost of licensing transactions and the support available—not any newly confirmed reduction in franchise fees.

Tax deduction bill planned for 2026

Yau said the government would introduce a bill in 2026 to provide tax deductions for capital expenditure on purchasing IP or rights to use it, with the aim of lowering transaction costs. The report also noted that policies covering financing, taxation, talent and professional services would support Hong Kong’s development as a low-cost IP trading platform with high liquidity.

What is confirmed at this stage is the government’s proposed legislative direction and its target timetable for introducing the bill. The report does not specify which rights would qualify, how deductions would work or when the measures would take effect. Nor does it explain how different charges under franchise agreements would be treated. The proposal therefore should not be taken to mean that all franchise fees, brand licensing fees or ongoing payments would qualify for deductions under the new arrangements.

Investors comparing franchise opportunities would be better advised to assess existing payment obligations separately from the proposed tax arrangements. Until the bill’s details are published, uncertain tax benefits should not be factored into baseline payback calculations, and the policy direction should not be treated as a confirmed cost saving.

New committee to co-ordinate IP trading strategy

The government will also establish a committee to help formulate strategies and support measures for IP trading development. The report does not name its members or give a launch date or detailed work schedule. For now, it should be regarded as an announced policy initiative.

The initiative is linked to Hong Kong’s first five-year plan. According to a 16 September report by Zhitong Finance, Chief Executive John Lee announced the First Five-Year Plan for the Economic and Social Development of the Hong Kong Special Administrative Region (2026–2030) that day. Wen Wei Po reported that the plan seeks to strengthen Hong Kong’s role as a regional IP trading centre through work on institutional arrangements, talent and financing.

Yau said the policy priorities included strengthening IP protection mechanisms aligned with international rules, deepening patent system reform and supporting mainland Chinese companies in using Hong Kong as an IP trading platform for overseas expansion. Hong Kong’s franchise sector can monitor whether subsequent support measures address its transaction needs, but the information currently available does not identify any funding or service programmes specifically for franchise brands.

Separate timetables for training and patent reform

On talent development, the Hong Kong Intellectual Property Academy is due to launch formally in the fourth quarter of 2026, offering more systematic and widely recognised training for working professionals. Teams handling brand licensing documents may wish to follow these developments. However, the report does not provide a course list, enrolment arrangements or fees, so it should not be assumed that courses tailored to franchise operations are already available.

On the patent system, the Intellectual Property Department will continue to build and expand its patent examination team and introduce pilot facilitation measures in 2027 for relevant original grant patent applications. The government has also completed a consultation on the framework and key issues for regulating local patent agency services.

These measures all fall under IP policy, but they address different issues. Measures to facilitate patent applications are not arrangements for approving brand licences, and the regulation of patent agency services should not be interpreted as new rules for franchise consultants. Policy announcements should be assessed by the specific rights, services and transaction types involved, rather than treating the entire package as a reform of the franchising system.

What can the franchise sector prepare now?

Brand owners and prospective franchisees can begin by organising existing or proposed licensing documents, clearly recording the rights being licensed, the territory covered, the term, renewal conditions and the nature of each payment. Where an agreement bundles several rights and services into a single charge, legal and tax advisers can advise on which records to retain for comparison with the legislation once it is published. This is a recommendation on document preparation, not a determination that the expenditure will qualify for a tax deduction.

The next points to watch are how the bill defines qualifying expenditure, when the measures will take effect, and what specific arrangements the new committee and IP academy announce. At present, the available information supports the conclusion that the government is advancing these policies, but it is not enough to calculate tax savings or investment returns for an individual franchise opportunity.

Practical tip: first organise the details of the licensed rights and payments, and assess your franchise budget on existing terms. Once the bill and supporting measures are published, ask professional advisers to check whether they apply to your arrangements.