A major international tax reform has taken effect in Hong Kong. The OECD's global minimum tax (known as Pillar Two) requires large multinational enterprise (MNE) groups to pay at least 15% tax wherever they operate. The first filing deadline is approaching — June 2026 for groups with a December year-end.
What is the global minimum tax?
In July 2021, Hong Kong joined more than 130 jurisdictions in accepting the OECD’s two-pillar international tax reform framework (BEPS 2.0). The goal is to prevent large MNE groups from shifting profits to low-tax jurisdictions to reduce their tax bills.
Under Pillar Two, MNE groups with annual consolidated revenue of €750 million or more must pay a global minimum tax of 15% on profits in every jurisdiction where they operate. If a group’s effective tax rate falls below 15% in any jurisdiction, a top-up tax is charged to bring it up to 15%.
Who is affected?
- Only MNE groups with annual consolidated revenue of €750 million (approximately HK$6.4 billion) or more in at least two of the past four years.
- If you run a small or medium-sized business, this new tax does not affect you.
- Hong Kong’s standard profits tax rate (16.5% for profits over HK$2 million) is already above 15%, so most locally operating companies are not affected. The rules mainly target groups with subsidiaries in low-tax jurisdictions.
When does it take effect?
| Mechanism | Effective Date |
|---|---|
| Income Inclusion Rule (IIR) The parent entity of an in-scope MNE group pays top-up tax on its low-taxed subsidiaries outside Hong Kong | Fiscal years beginning on or after 1 January 2025 |
| Hong Kong Minimum Top-Up Tax (HKMTT) Hong Kong collects top-up tax on low-taxed entities within Hong Kong (taking priority over other jurisdictions) | Fiscal years beginning on or after 1 January 2025 |
| Undertaxed Profits Rule (UTPR) A backstop rule for cases not covered by IIR | To be announced by the Secretary for Financial Services and the Treasury |
Key dates for 2026
- 19 January 2026: IRD launched Phase 1 of the Pillar Two Portal, allowing in-scope MNE groups to file top-up tax notifications electronically.
- June 2026: First notification deadline for groups with a 31 December 2025 year-end. Notification must be filed within 6 months after the end of the fiscal year.
- 21 April 2026: Hong Kong signed the Multilateral Competent Authority Agreement on the Exchange of GloBE Information Returns (GIR MCAA), enabling centralised group filing and reducing duplicate submissions.
- Late 2026 (Q4): Phase 2 of the Pillar Two Portal expected to launch, supporting top-up tax return filing and online viewing of tax assessment notices.
What do you need to do?
- Check if your group qualifies. Does your MNE group have annual consolidated revenue of €750 million or more?
- Apply for a Group Code. Submit IRD Form IR1485 to obtain a unique MNE group code.
- Register for the Business Tax Portal (BTP). You need a BTP account to access the Pillar Two Portal.
- File the top-up tax notification. Due within 6 months after the end of the fiscal year.
- Prepare the GloBE Information Return (GIR). The full top-up tax return is due within 15 months after year-end (18 months for the first year).
Safe harbours (simplified compliance)
The OECD has introduced safe harbour provisions that can reduce the compliance burden. If certain conditions are met, in-scope MNE groups may be exempted from performing full GloBE calculations:
- Transitional CbCR Safe Harbour
- QDMTT Safe Harbour — if HKMTT qualifies, the group’s top-up tax in Hong Kong is deemed zero
- Simplified Calculations Safe Harbour for non-material constituent entities
- Transitional UTPR Safe Harbour
Hong Kong’s OECD qualified status
The OECD has confirmed that Hong Kong’s IIR, HKMTT, and QDMTT Safe Harbour have transitional qualified status from 1 January 2025. This means Hong Kong’s rules are recognised as meeting the OECD’s Pillar Two standards. Hong Kong is listed in the OECD’s central record of qualified legislation.
Source: Inland Revenue Department, Hong Kong (ird.gov.hk, BEPS 2.0 Pillar Two Page, updated Jan 2026) and OECD (oecd.org, Global Minimum Tax, GloBE Model Rules, Central Record of Transitional Qualified Status, Jan 2026).