Key Takeaways
- Hong Kong's global minimum tax rules took effect for fiscal years beginning on or after 1 January 2025, following the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 enacted on 6 June 2025.
- The 15% minimum tax applies to multinational enterprise groups with consolidated annual revenue of EUR 750 million or more in at least two of the four preceding fiscal years.
- Hong Kong constituent entities must file an annual top-up tax notification within six months of the fiscal year-end, and a top-up tax return within 15 months, or 18 months for the first transition year.
- The Inland Revenue Department launched the first phase of its Pillar Two Portal on 19 January 2026, with the return-filing phase to follow in Q4 2026.
- Mandatory e-filing of profits tax returns (BIR51 and BIR52) applies to in-scope entities for years of assessment beginning on or after 1 April 2025, under a once-in, always-in mechanism.
- Non-compliance can trigger a level 3 fine of up to HK$10,000 plus a further fine of three times the undercharged top-up tax.
What Has Changed for Multinational Groups in Hong Kong?
Could a 15% global minimum tax turn your Hong Kong holding company's low-tax advantage into a compliance burden?
In this guide, we explain how the Pillar Two global minimum tax and the new eTAX filing requirements affect Hong Kong holding companies, and what your group must do to stay compliant.
Hong Kong has folded the OECD's Pillar Two framework into domestic law. An Inland Revenue Ordinance amendment passed on 6 June 2025. It took effect for fiscal years beginning on or after 1 January 2025.
Which groups are caught? Those with group revenue of EUR 750 million or more in at least two of the four preceding years.
Three rules then operate together. The Income Inclusion Rule (IIR) acts first, with a parent entity paying top-up tax on its low-taxed subsidiaries. The Undertaxed Profits Rule (UTPR) is the backstop. It collects shortfalls the IIR leaves behind, for instance where the parent sits outside an IIR jurisdiction. The Hong Kong Minimum Top-up Tax (HKMTT) works differently. It lets Hong Kong collect top-up tax on its own constituent entities before another jurisdiction's backstop reaches the profit. Together, these Global Anti-Base Erosion (GloBE) rules set a 15% floor on effective tax worldwide.
Structures built on Hong Kong's low profits tax rate and participation exemptions may now create top-up tax exposure. Groups using Hong Kong as a holding or treasury hub should model their GloBE outcome early. Businesses reviewing their structure can also consider our guide to offshore company set up in Hong Kong.
What Filing Obligations and Deadlines Apply?
Top-up tax notifications are due within six months of the fiscal year-end. Returns follow within 15 months, or 18 in the first transition year.
Top-up tax reporting works on a single-return basis rather than entity by entity. One nominated constituent entity files the single return electronically through the Inland Revenue Department's Pillar Two Portal. In practice, this is the group's ultimate parent or another member it designates. The filing covers every Hong Kong constituent entity, spanning both the global Pillar Two regime and the HKMTT.
Each Hong Kong constituent entity must submit its own notification in the prescribed form. It tells the IRD the group falls within the scope of the GloBE rules and the HKMTT. In short, the return duty is centralised in one designated filer. The notification duty stays with every member individually.
The key deadlines are:
- notification: within six months of the fiscal year-end
- top-up tax return: within 15 months, or 18 months in the first transition year
The IRD opened the first phase of the Pillar Two Portal on 19 January 2026, enabling electronic submission of notifications. The second phase follows in the fourth quarter of 2026. It adds top-up tax return filing and viewing of assessment notices. Access requires a designated business account and a unique group code from Form IR1485.
How Do eTAX Filing Requirements Affect Hong Kong Holding Companies?
In-scope entities must e-file profits tax returns (BIR 51 and BIR 52) for years of assessment beginning on or after 1 April 2025.
eTAX requirements reach beyond top-up tax into ordinary profits tax compliance. A constituent entity of an in-scope group must file its profits tax return online. Corporate filers submit form BIR 51 electronically. Non-corporate entities, such as branches, submit form BIR 52. The duty covers years of assessment beginning on or after 1 April 2025.
The rules adopt a once-in, always-in mechanism. Once required to e-file, an entity must continue to e-file every subsequent year. This applies even if the entity later leaves an in-scope group. Limited exceptions apply for winding-up, amalgamation or specific filing dates.
Several workstreams need lead time:
- data preparation in inline eXtensible Business Reporting Language (iXBRL) format, which tags financial data for machine reading
- portal account registration
- internal sign-off workflows
Groups that have completed the post-incorporation compliance steps should update their annual compliance calendars. Three milestones now apply:
- the notification deadline
- the return deadline
- the e-filed profits tax return
What Penalties Apply and How Should Groups Prepare?
Non-compliance attracts a level 3 fine of up to HK$10,000, plus a further fine of three times the undercharged top-up tax.
Failure to file the return or notification attracts a level 3 fine under the Criminal Procedure Ordinance. The fine is capped at HK$10,000. A further fine of three times the undercharged top-up tax may apply.
A worked example shows the collection order. A Hong Kong parent owns a foreign subsidiary taxed at an effective 5%. On every 100 of profit, the subsidiary sits 10 points below the 15% floor, so top-up tax of 10 arises. Hong Kong's IIR makes the parent pay it. If a Hong Kong entity itself were undertaxed, the HKMTT would collect first. Another jurisdiction's UTPR backstop reaches only what remains.
Preparation should start well before the first deadlines. Groups should map their reporting fiscal year-end against the deadlines set out above. Local filings should align with the group's wider GloBE reporting timetable. Borderline groups should retest consolidated turnover against the EUR 750 million threshold annually.
For holding companies, substance documentation and participation exemption records remain central to the Foreign-Sourced Income Exemption regime. We help clients operating holding structures in Hong Kong assess their Pillar Two exposure. We also prepare the required notifications and manage e-filing through the IRD's portals.
Frequently Asked Questions
The regime applies to fiscal years beginning on or after 1 January 2025, following the enactment of the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 on 6 June 2025.
MNE groups with consolidated annual revenue of EUR 750 million or more in at least two of the four fiscal years immediately preceding the current fiscal year are in scope of the 15% global minimum tax and the Hong Kong Minimum Top-up Tax.
The top-up tax notification is due within six months after the last day of the reporting fiscal year. The top-up tax return is due within 15 months after the fiscal year-end, extended to 18 months for groups in their first transition year.
Yes. Constituent entities of in-scope MNE groups must e-file forms BIR 51 and BIR 52 for years of assessment beginning on or after 1 April 2025, and the once-in, always-in rule keeps this obligation in place for subsequent years even if the group later falls out of scope.
A level 3 fine of up to HK$10,000 applies, together with a further fine of up to three times the amount of undercharged top-up tax.
