Hong Kong Global Minimum Tax in 2026: How the 15% Pillar Two Rules Work

Who is in scope of Hong Kong’s global minimum tax, and which rules apply?

The rules apply to a multinational enterprise (MNE) group with annual consolidated revenue of EUR 750 million or more in at least two of the four fiscal years before the year being tested. A group reporting in another currency converts at the European Central Bank’s December average rate for the calendar year before the fiscal year begins, or the Hong Kong Monetary Authority’s rate if the ECB quotes none. Once a group is in scope, every Hong Kong constituent entity, joint venture and joint venture subsidiary has obligations, whatever its own size.

Excluded entities stay outside the charge: governmental entities, international organisations, non-profit organisations, pension funds, and investment funds and real estate investment vehicles that are the ultimate parent entity, plus certain entities at least 95% or 85% owned by them. Investment entities and insurance investment entities are outside the HKMTT. The charging rules sit in Part 4AA of the Inland Revenue Ordinance, added by Ord. No. 21 of 2025, which was enacted on 6 June 2025 and reaches back to 1 January 2025.

Worked example: HKMTT on HK$200 million of GloBE income

On these figures the group owes HKMTT of HK$9,380,000 for 2025 and HK$9,395,000 for 2026, because its Hong Kong effective tax rate of 10% is 5 points below 15%. The calendar-year group has two Hong Kong constituent entities: an operating company with HK$150 million of GloBE income and a treasury company with HK$50 million. Covered taxes total HK$20 million, low because some profit was offshore and some was taxed at a concessionary rate. Eligible payroll is HK$50 million and eligible tangible assets HK$100 million (illustrative), at each year’s transitional SBIE rates.

No safe harbour helps: a simplified ETR of about 10% fails the 16% (2025) and 17% (2026) transitional CbCR tests, and profit far exceeds the SBIE. Under the QDMTT Safe Harbour, a parent’s IIR treats Hong Kong top-up tax as zero, so the tax is paid in Hong Kong.

Safe harbours and the OECD side-by-side package: what applies in Hong Kong?

Hong Kong provides the four safe harbours listed below, and the IRD confirmed on 8 January 2026 that its QDMTT Safe Harbour has transitional qualified status. The OECD/G20 Inclusive Framework’s side-by-side package of 5 January 2026 adds a Side-by-Side Safe Harbour that switches off the IIR and UTPR for groups parented in qualifying jurisdictions, US-parented groups first, for fiscal years beginning on or after 1 January 2026. It also adds UPE, simplified ETR and substance-based tax incentive safe harbours, and one more year of the transitional CbCR safe harbour at 17%.

Domestic minimum top-up taxes such as the HKMTT continue to apply under the package. As at 8 October 2026, the IRD’s minimum tax page lists only the four safe harbours below and does not mention the package. US-parented groups should budget for HKMTT on low-taxed Hong Kong profit, and should not assume a Hong Kong intermediate parent is relieved from the Hong Kong IIR until the IRD says so.

• QDMTT Safe Harbour: if its conditions are met, GloBE top-up tax for Hong Kong under any IIR or UTPR is deemed zero, leaving only the HKMTT.
• Transitional CbCR Safe Harbour: zero top-up tax for a jurisdiction that passes, on qualified CbC report data, the de minimis test (revenue under EUR 10 million and profit under EUR 1 million), the simplified ETR test (16% for 2025, 17% for 2026) or the routine profits test.
• Simplified Calculations Safe Harbour: simplified calculations for non-material constituent entities.
• Transitional UTPR Safe Harbour: no UTPR on profits in the UPE’s jurisdiction during the transition where its corporate tax rate is at least 20%.

How the HKMTT interacts with profits tax, FSIE and Hong Kong’s 0% regimes

The HKMTT does not replace profits tax: it is a separate top-up, computed on a jurisdictional GloBE basis once profits tax is settled. A Hong Kong ETR below 15% usually comes from offshore profits, exempt income or concessionary rates rather than the 16.5% headline rate. Our separate guides cover each regime in depth; the points below cover only how each one interacts with the minimum tax.

• Two-tier profits tax: the 8.25% rate on the first HK$2 million goes to only one entity among connected entities, so it saves at most HK$165,000 a year and rarely moves the ETR.
• Offshore claims: profits accepted as offshore pay no profits tax but still count as Hong Kong GloBE income, so they can be topped up to 15%.
• FSIE: dividends and equity gains on holdings of 10% or more are generally excluded from GloBE income anyway, but FSIE-exempt foreign interest and other gains count and can lower the ETR.
• Concessionary 8.25% and 0% regimes, such as those for corporate treasury centres and ship lessors: the profits most likely to attract HKMTT.
• Fund and family office regimes: the 0% concessions still apply, and a Bill gazetted on 12 June 2026 would widen them; a fund that is the UPE is an excluded entity and investment entities are outside the HKMTT.

How to register, notify and file: step by step

Registration comes first. A group cannot file its top-up tax notification on the IRD’s Pillar Two Portal without an MNE group code from Form IR1485, and the notification is due 6 months after the fiscal year ends, a year before the first return. For a calendar 2025 year, that meant 30 June 2026 for the notification and means 30 June 2027 for the return.

1. Test scope each year in euros and list every Hong Kong constituent entity, joint venture, investment entity and excluded entity.
2. Apply for an MNE group code (or JV code) on paper Form IR1485; there is no deadline, but the IRD asks groups to apply early.
3. Set up a Business Tax Portal business account, a business registration number for each entity and an e-Cert (Organisational) with AEOI Functions.
4. Choose a designated local entity to file for all Hong Kong entities and, if needed, engage a service provider under section 13 of Schedule 63.
5. File the top-up tax notification within 6 months of the fiscal year end, naming the GIR filing entity and listing all Hong Kong constituent entities.
6. E-file each entity’s profits tax return: Part 4AA entities must e-file from 2025/26 and every year after.
7. Test the safe harbours, then compute the Hong Kong ETR, SBIE and HKMTT, plus any IIR on low-taxed subsidiaries abroad.
8. Prepare GIR data in the OECD XML schema and file the top-up tax return within 18 months for the first transition year and 15 months after that (31 March 2028 for 2026).
9. Pay within one month after the return deadline or the notice of assessment, whichever is later; object within 2 months of the notice.

Documents and data checklist

Most of the data sits at group level, outside the Hong Kong statutory accounts, so collect it before the notification deadline rather than the return deadline. The list below covers the scope test, the notification, the HKMTT computation and the GIR. Keep it with the working papers: the IRD can demand supporting information, and ignoring its notice is an offence.

• Consolidated accounts for the four preceding fiscal years and the exchange rate used for the EUR 750 million test.
• Group chart showing the UPE, intermediate and partially-owned parents, joint ventures, investment entities, excluded entities and ownership percentages.
• MNE or JV group code, business registration numbers, Business Tax Portal account and e-Cert with AEOI Functions.
• Board approvals for the designated local entity, any designated filing entity and any service provider.
• Qualified country-by-country report data for the transitional CbCR safe harbour.
• GloBE adjustments, an election log, and current and deferred tax workings for covered taxes.
• Hong Kong eligible payroll costs and tangible asset carrying values for the SBIE, and the validated GIR XML file.

Penalties for late or incorrect notifications and returns

Failing without reasonable excuse to file a top-up tax notification or return is an offence under section 80O of the Inland Revenue Ordinance, punishable by a level 3 fine of HK$10,000 plus treble the top-up tax undercharged. Engaging a service provider is not in itself a reasonable excuse. Where there is no prosecution, the IRD can instead assess additional tax under section 82A.

• Late or missing notification or return: level 3 fine (HK$10,000) plus treble the top-up tax undercharged.
• Misleading, false or inaccurate return, notice or statement: level 3 fine plus treble the undercharge.
• Ignoring an IRD notice requiring information: level 3 fine (HK$10,000).
• Ignoring a court order to do the omitted act: level 4 fine (HK$25,000).
• Service providers: level 3 fine (HK$10,000) for failing to file; level 6 (HK$100,000) for ignoring a court order.
• Additional tax under section 82A instead of prosecution: up to treble the top-up tax undercharged.

What changed in 2025–2026: Hong Kong minimum tax timeline

Hong Kong moved from consultation to a working filing system in about two years. The law reaches back to 1 January 2025 but was enacted only in June 2025, and the portal opened in January 2026, so the first notifications were due on 30 June 2026 and the first top-up tax returns are due on 30 June 2027 for calendar-year groups.

Hong Kong vs Singapore, Malaysia and the UAE: domestic top-up tax start dates

All four jurisdictions started their domestic top-up taxes for fiscal years beginning on or after 1 January 2025, so a group with entities in each runs four local computations for its 2025 year, each with its own registration and filing forms. Hong Kong, Singapore and Malaysia also apply the IIR to parents based there; the UAE has decided not to implement it for now.

Common mistakes

Most errors come from treating the minimum tax as an extension of profits tax rather than a separate regime with its own data, deadlines, portal and penalties. The mistakes below are the ones most likely to cost a group a penalty or an unexpected top-up, and each can be avoided by checking scope, registration and the transitional rates early in the year.

• Testing only the current year’s revenue: scope depends on two of the four preceding fiscal years.
• Assuming the 16.5% headline rate means no top-up: offshore profits, FSIE-exempt interest and concessions can pull the GloBE ETR below 15%.
• Missing the 6-month notification because the return has 18 months: for a December 2025 year end it was due on 30 June 2026.
• Leaving Form IR1485 too late: it is a paper application, and the code is needed before the notification.
• Using an ordinary organisational e-Cert, or asking the tax representative to file: the portal needs an e-Cert with AEOI Functions and an engaged service provider.
• Using the long-run 5% SBIE rates: 2025 uses 9.6% of payroll and 7.6% of tangible assets, and 2026 uses 9.4% and 7.4%.
• Treating the side-by-side package as Hong Kong law: the IRD had announced no adoption as at October 2026.

Glossary of global minimum tax terms

Hong Kong’s Ordinance follows the structure and article numbering of the OECD GloBE Model Rules, so its terms carry their OECD meaning and the OECD Commentary helps to read them. The short definitions below cover the terms used in this guide and in the IRD’s own guidance, on the Pillar Two Portal and in the top-up tax notification and return.

• Effective tax rate (ETR): adjusted covered taxes of all constituent entities in a jurisdiction divided by their net GloBE income.
• GloBE income: an entity’s accounting net income or loss, adjusted under the GloBE rules, for example to remove excluded dividends.
• Covered taxes: taxes on income or profits, such as Hong Kong profits tax, with adjustments for deferred tax.
• Substance-based income exclusion (SBIE): a deduction from GloBE income based on eligible payroll and tangible assets in the jurisdiction.
• QDMTT: a qualified domestic minimum top-up tax; Hong Kong’s is the HKMTT.
• Constituent entity: an entity in the group’s consolidated accounts, other than an excluded entity, or a permanent establishment.
• Ultimate parent entity (UPE): the entity at the top of the group that prepares the consolidated financial statements.