Grants and Hong Kong’s enhanced R&D tax deduction work differently for AI projects — how to tell them apart.
dgm is an independent osFoundry integration partner — not affiliated with osFoundry’s maker (OS LLC), and dgm has no completed client integrations yet.
Grants and tax deductions both lower the cost of an AI project, but they work very differently in Hong Kong — and confusing them leads to poor planning.
| Item | Detail |
|---|---|
| Grant / funding | Co-funds part of an approved project up front |
| Tax deduction | Reduces taxable profits after qualifying spend |
| R&D deduction | Hong Kong offers an enhanced deduction for qualifying R&D |
| Which first | Confirm interaction before relying on both |
How they differ
A grant co-funds part of an approved project, usually up front and tied to specific eligible costs. A tax deduction reduces your taxable profits after you have spent — Hong Kong offers an enhanced deduction for qualifying R&D expenditure (a higher rate on the first tranche, then a standard enhanced rate), administered through the tax system rather than a grant authority.
Which applies to AI
Genuine AI R&D may qualify for the enhanced R&D deduction; adoption of existing AI tools generally does not, and is better matched to an adoption-oriented programme. Note that the Technology Voucher Programme (TVP), Hong Kong’s best-known SME tech-adoption funding, stopped accepting new applications after 31 December 2024 — so it is not an active route for a new AI project, despite many older blogs still listing it. Confirm whether a cost can be both grant-funded and deducted before assuming it.
Where dgm fits
Important: these are programmes a business applies for directly with the relevant Hong Kong authority. dgm is an independent AI-integration agency — it is not a registered or approved vendor of any of these schemes (none of them operates a vendor registry), so nothing here implies dgm can secure or deliver a grant-funded engagement. dgm can help scope and build the AI project; eligibility, approval and any claim rest with you and the agency. For tax questions, consult a Hong Kong tax adviser; dgm can help scope the project. Support levels, caps, eligibility and round status change — confirm the current details on the official programme page before relying on them.
Where dgm fits
dgm is an independent integration partner that helps Hong Kong businesses adopt osFoundry — scoping a first use case, handling the build, and connecting AI to the systems you already run. dgm is independent of osFoundry’s maker (OS LLC) and has no completed client integrations yet, so everything described here is a service offered, not a past result. If you want to scope a practical first project, dgm can help you map it out.