OECD Pillar Two in Hong Kong.

For global information on OECD Pillar Two and the global minimum tax for multinational groups in all markets, see Acclime Group’s guide.

Hong Kong SAR has enacted the OECD’s Pillar Two Global Anti-Base Erosion (GloBE) Rules, introducing a 15% global minimum effective tax rate for large multinational enterprise (MNE) groups. The rules apply for fiscal years beginning on or after 1 January 2025, alongside a domestic minimum top-up tax, the Hong Kong Minimum Top-up Tax (HKMTT).

This guide summarises Hong Kong’s implementation status, filing obligations and the local considerations most relevant to in-scope groups.

At a glance

Local summary

Hong Kong has adopted two of the GloBE charging mechanisms: the Income Inclusion Rule (IIR) and a Qualified Domestic Minimum Top-up Tax (QDMTT), implemented domestically as the Hong Kong Minimum Top-up Tax (HKMTT). The Undertaxed Payments Rule (UTPR) has not been adopted.

For in-scope groups, where the effective tax rate on Hong Kong profits falls below 15%, top-up tax will be collected in the first instance through the HKMTT. Because Hong Kong offers a broad range of exemptions, incentives and enhanced deductions, groups may find their Hong Kong effective tax rate falls below the 15% threshold and should model their exposure accordingly.

Interaction with Hong Kong’s tax system

Two features of the Hong Kong regime are particularly relevant for in-scope groups:

The HKMTT takes priority: Hong Kong’s domestic minimum top-up tax is designed as a Qualified Domestic Minimum Top-up Tax (QDMTT). It therefore takes priority over other jurisdictions’ top-up taxes, such as an Income Inclusion Rule (IIR) applied in a parent entity’s jurisdiction, in respect of low-taxed profits arising in Hong Kong.

Interaction with the FSIE regime: Under the refined Foreign-Sourced Income Exemption (FSIE) regime, a QDMTT paid in a foreign jurisdiction can be recognised as a qualifying similar tax, provided the foreign jurisdiction’s tax rate is at least 15%.

Local deviations

General anti-avoidance rules apply.

Compliance and filing obligations

The key filing obligations take effect from 2026:

• Registration: In-scope groups register via the Business Tax Portal (BTP) in order to access the dedicated Pillar Two Portal.
• Top-up Tax Notification: Due within six months after the end of the reporting fiscal year.
• Top-up Tax Return: Due within 15 months after the fiscal year-end, extended to 18 months for the first year within scope (the transition year).
• Mandatory e-filing: All returns are submitted electronically, which will often require an organisational e-Cert with AEOI functions.
• Designated filer: An MNE group may appoint one Hong Kong constituent entity to file on behalf of the group.

Tax incentive impact

Hong Kong SAR offers a wide range of income exclusions and exemptions, tax incentives and enhanced deductions, any of which could reduce a group’s overall effective tax rate in Hong Kong below the 15% global minimum tax rate under BEPS Pillar Two.

Changes to the Hong Kong tax system were implemented because of Hong Kong SAR’s inclusion on the European Union’s “grey list” for tax purposes. Affected businesses should begin assessing and modelling the impact of these changes and consider whether any business restructuring will be required.

Key local issues

A constituent entity that fails to file the top-up tax return or the top-up tax notification is liable for a fine at level 3 under the Criminal Procedure Ordinance (up to HK$10,000 / approximately US$1,279), together with a further fine of three times the amount of any undercharged top-up tax.

Local contact

For advice on how Pillar Two and the HKMTT apply to your group’s Hong Kong operations, please contact Acclime Hong Kong for their tax services.