Hong Kong has implemented the OECD's global minimum tax ("Pillar Two") with effect from fiscal years beginning on or after 1 January 2025. It applies only to large multinational groups with consolidated annual revenue of EUR 750 million or more in at least two of the four preceding fiscal years. Most SMEs and owner-managed groups are outside its scope, but they may still be asked by larger customers, investors or parent companies to confirm their position.
In-scope groups pay a top-up tax where the effective tax rate in a jurisdiction is below 15%. In-scope Hong Kong entities have new registration, notification and return obligations with the Inland Revenue Department.
Are you in scope?
| Question | If yes |
|---|---|
| Does your group prepare consolidated financial statements? | Continue |
| Was consolidated revenue EUR 750 million or more in at least two of the four previous fiscal years? | The group is likely in scope |
| Does the group have an entity or permanent establishment in Hong Kong? | Hong Kong obligations may apply to it |
| Is the entity an excluded entity (for example certain government entities, pension funds or investment funds at the top of the group)? | Specific exclusions may apply |
How it works in Hong Kong
| Rule | What it does |
|---|---|
| Income Inclusion Rule (IIR) | A Hong Kong parent entity pays top-up tax for low-taxed constituent entities of the group elsewhere |
| Hong Kong minimum top-up tax (HKMTT) | A domestic top-up tax on low-taxed Hong Kong entities, so that Hong Kong collects the top-up on Hong Kong profits first |
| Undertaxed Profits Rule (UTPR) | A back-stop rule; Hong Kong has legislated for it but its application has been deferred |
| Safe harbours | Transitional country-by-country reporting safe harbours and other reliefs can reduce compliance work in the early years |
Compliance obligations
| Obligation | Timing |
|---|---|
| Registration with the Inland Revenue Department (group code, Form IR1485) | As required by the Department, ahead of filings |
| Top-up tax notification | Within 6 months after the end of the fiscal year |
| Top-up tax return (and GloBE information return where Hong Kong files it) | Within 15 months after the end of the fiscal year (18 months for the first transition year) |
| Submission | Through the Inland Revenue Department's Pillar Two portal |
A group may designate one Hong Kong entity to file on behalf of all its Hong Kong constituent entities. Failure to comply can lead to penalties under the Inland Revenue Ordinance.
What smaller groups should do
- Document your consolidated revenue history, so that you can confirm out-of-scope status when asked.
- If you are a subsidiary of a large foreign group, expect information requests from the group's tax team; accurate, timely Hong Kong accounts make this straightforward.
- Review incentives and concessions you rely on; for in-scope groups, low-tax regimes can be offset by top-up tax.
- Monitor your growth: groups approaching the threshold need time to build the data and processes.
- Confirming whether your group is in scope, using your financial data.
- Preparing Hong Kong statutory accounts and data packs for group Pillar Two reporting.
- Coordinating with Pillar Two specialists for registration, notifications and returns.
- RENT-CFO can lead the finance processes and data collection that in-scope groups need.
Official references
- Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025
- Inland Revenue Department: Global minimum tax and Hong Kong minimum top-up tax, www.ird.gov.hk