{"id":207,"date":"2026-10-08T02:24:12","date_gmt":"2026-10-08T02:24:12","guid":{"rendered":"https:\/\/vivosgroup.com\/hk\/insights\/hong-kong-global-minimum-tax-pillar-two\/"},"modified":"2026-10-13T06:10:05","modified_gmt":"2026-10-13T06:10:05","slug":"hong-kong-global-minimum-tax-pillar-two","status":"publish","type":"post","link":"https:\/\/vivosgroup.com\/hk\/insights\/hong-kong-global-minimum-tax-pillar-two\/","title":{"rendered":"Hong Kong Global Minimum Tax in 2026: How the 15% Pillar Two Rules Work"},"content":{"rendered":"\n
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Insights \u00b7 Hong Kong Tax<\/p>\n\n\n\n

Hong Kong Global Minimum Tax in 2026: How the 15% Pillar Two Rules Work<\/h1>\n\n\n\n

Hong Kong\u2019s global minimum tax applies a 15% minimum effective tax rate to multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years, for fiscal years beginning on or after 1 January 2025. The Hong Kong Minimum Top-up Tax (HKMTT) and an Income Inclusion Rule apply; the UTPR has no start date. Hong Kong entities notify the IRD within 6 months of the year end and file returns within 15 months, or 18 for the first year.<\/p>\n\n\n\n

For finance and tax teams of multinational groups with Hong Kong entities or a Hong Kong parent. This guide covers scope and excluded entities, the IIR, HKMTT and UTPR, a worked HKMTT calculation, safe harbours and the side-by-side package, IRD deadlines, penalties and a regional comparison.<\/p>\n<\/div>\n\n\n\n

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Point<\/th>Position at 8 October 2026<\/th><\/tr>
Who is in scope<\/td>MNE groups with consolidated revenue of EUR 750 million or more in at least 2 of the 4 preceding fiscal years<\/td><\/tr>
Rules in force<\/td>IIR and HKMTT, for fiscal years beginning on or after 1 January 2025<\/td><\/tr>
UTPR<\/td>Legislated; start date not yet specified<\/td><\/tr>
Minimum rate<\/td>15% effective tax rate, tested for all Hong Kong entities together<\/td><\/tr>
Top-up tax notification<\/td>Annual, within 6 months after the fiscal year end (30 June 2026 for a calendar 2025 year)<\/td><\/tr>
Top-up tax return (includes GIR data)<\/td>15 months after the fiscal year end; 18 months for the first transition year<\/td><\/tr>
Payment<\/td>One month after the return deadline or the notice of assessment, whichever is later<\/td><\/tr>
Main penalty<\/td>Level 3 fine (HK$10,000) plus treble the top-up tax undercharged<\/td><\/tr>
Where to file<\/td>IRD Pillar Two Portal; returns module due in the fourth quarter of 2026<\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n\n\n\n
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Who is in scope of Hong Kong\u2019s global minimum tax, and which rules apply?<\/h2>\n\n\n\n

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\u2019s December average rate for the calendar year before the fiscal year begins, or the Hong Kong Monetary Authority\u2019s 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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Rule<\/th>Who it charges<\/th>Status at 8 October 2026<\/th><\/tr><\/thead>
Hong Kong Minimum Top-up Tax (HKMTT)<\/td>Low-taxed constituent entities, joint ventures and their subsidiaries in Hong Kong; allocated by GloBE income unless paying entities are designated<\/td>In force from fiscal years beginning on or after 1 January 2025; applies before the IIR and UTPR<\/td><\/tr>
Income Inclusion Rule (IIR)<\/td>Hong Kong ultimate parents; Hong Kong intermediate parents where the UPE\u2019s jurisdiction has no IIR; Hong Kong partially-owned parents<\/td>In force from the same date, on low-taxed subsidiaries outside Hong Kong<\/td><\/tr>
Undertaxed Profits Rule (UTPR)<\/td>Hong Kong constituent entities, by employees and tangible assets<\/td>Legislated; start date to be specified by the Secretary for Financial Services and the Treasury<\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n\n\n\n
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Worked example: HKMTT on HK$200 million of GloBE income<\/h2>\n\n\n\n

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\u2019s transitional SBIE rates.<\/p>\n\n\n\n

Step<\/th>Fiscal year beginning in 2025<\/th>Fiscal year beginning in 2026<\/th><\/tr><\/thead>
1. Hong Kong GloBE income (both entities)<\/td>HK$200,000,000<\/td>HK$200,000,000<\/td><\/tr>
2. Covered taxes<\/td>HK$20,000,000<\/td>HK$20,000,000<\/td><\/tr>
3. ETR: covered taxes \u00f7 GloBE income<\/td>10.0%<\/td>10.0%<\/td><\/tr>
4. Top-up percentage: 15% minus ETR<\/td>5.0%<\/td>5.0%<\/td><\/tr>
5. Payroll carve-out on HK$50,000,000<\/td>9.6% = HK$4,800,000<\/td>9.4% = HK$4,700,000<\/td><\/tr>
6. Tangible asset carve-out on HK$100,000,000<\/td>7.6% = HK$7,600,000<\/td>7.4% = HK$7,400,000<\/td><\/tr>
7. SBIE (step 5 plus step 6)<\/td>HK$12,400,000<\/td>HK$12,100,000<\/td><\/tr>
8. Excess profit: GloBE income minus SBIE<\/td>HK$187,600,000<\/td>HK$187,900,000<\/td><\/tr>
9. HKMTT: excess profit \u00d7 top-up percentage<\/td>HK$9,380,000<\/td>HK$9,395,000<\/td><\/tr>
10. Allocation by GloBE income (75% \/ 25%)<\/td>HK$7,035,000 \/ HK$2,345,000<\/td>HK$7,046,250 \/ HK$2,348,750<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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\u2019s IIR treats Hong Kong top-up tax as zero, so the tax is paid in Hong Kong.<\/p>\n<\/div>\n\n\n\n

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Safe harbours and the OECD side-by-side package: what applies in Hong Kong?<\/h2>\n\n\n\n

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\u2019s 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%.<\/p>\n\n\n\n

Domestic minimum top-up taxes such as the HKMTT continue to apply under the package. As at 8 October 2026, the IRD\u2019s 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.<\/p>\n\n\n\n