The Global Minimum Tax and HKMTT in Hong Kong in 2026: Scope, the IRD Portal and Form IR1485

Hong Kong has introduced the 15% global minimum tax for multinational groups with consolidated revenue of EUR 750 million or more — through an income inclusion rule (IIR) and its own domestic top-up tax, the Hong Kong minimum top-up tax (HKMTT). Both apply to fiscal years beginning on or after 1 January 2025. The obligation bites not at the point of payment but at the point of administration: the notification is due six months after the end of the fiscal year and the return fifteen months after it, and both are filed exclusively online through the Inland Revenue Department’s Pillar Two Portal.

Important. The practical problem in 2026 is not the tax computation — it is the access chain to the Portal, which cannot be completed in a day. Before a notification can be filed, the group must obtain a group code by submitting a paper Form IR1485, register a Business Tax Portal business account, and obtain for every authorised signer an e-Cert (Organisational) with AEOI Functions from Hongkong Post — an e-Cert (Personal) is not accepted, and neither is an organisational certificate without AEOI Functions. The first notification deadline for calendar-year groups, 30 June 2026, fell five months after the Portal opened on 19 January 2026.

The Legislation: One Ordinance, One New Part of Cap. 112 and Five Schedules

Hong Kong’s global minimum tax regime was introduced by the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 — Ord. No. 21 of 2025. There is no standalone “Pillar Two Act” in Hong Kong: the Ordinance amends the Inland Revenue Ordinance (Cap. 112).

Three different dates must be kept apart.

•          28 May 2025 — the Bill was passed by the Legislative Council. The Government’s press release of that day: “The Government welcomed the passage of the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill 2024 by the Legislative Council today (May 28).”

•          5 June 2025 — the date under the Chief Executive’s signature on the Ordinance as printed in the Gazette.

•          6 June 2025 — the date of publication in the Gazette and therefore the date of commencement. The IRD states it in terms: “The Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 (the Amendment Ordinance) was enacted on 6 June 2025.”

Author’s assessment: the “5 or 6 June” discrepancy that circulates in commentary is not an error in either source but a conflation of two different dates. The correct formulation is: signed on 5 June 2025, published in the Gazette and in operation on 6 June 2025.

The commencement provision (section 1(2)–(3) of the Ordinance):

“Subject to subsection (3), this Ordinance comes into operation on the day on which it is published in the Gazette.” “Section 3(3) is deemed to have come into operation on 1 January 2024.”

Note that the Ordinance’s commencement date and the charging dates are different things. The charging dates are set separately in the new section 26AE(6)–(8).

Legislative timeline:

Step	Date
FSTB and IRD public consultation	21 December 2023 – 20 March 2024
Bill gazetted	27 December 2024
First Reading and commencement of Second Reading debate	8 January 2025
Bills Committee BC101; Government Committee Stage Amendments (LC Paper No. CB(3)567/2025(01))	February – April 2025
Resumption of Second Reading, Committee Stage and Third Reading	28 May 2025
Signed by the Chief Executive	5 June 2025
Published in the Gazette and in operation	6 June 2025
Applies to fiscal years beginning	on or after 1 January 2025

The Ordinance adds a new Part 4AA and five Schedules — 61 to 65 — to Cap. 112. Part 4AA itself is short: a framework Part of four sections that pulls the detail in from the Schedules.

•          26AD — Interpretation of Part 4AA

•          26AE — Charge of top-up tax under IIR and UTPR and charge of domestic minimum top-up tax under HKMTT

•          26AF — Consistency with the OECD GloBE rules documents

•          26AG — Power to amend definition of OECD GloBE model rules and Schedules 61 to 64

Schedule	Official title	Content
Schedule 61	GloBE Rules	The domesticated OECD Model Rules: scope, the IIR and UTPR charging provisions, computation of GloBE Income, computation of Adjusted Covered Taxes, the effective tax rate and top-up tax, restructurings, transi­tion. Part 3 contains the safe harbours
Schedule 62	HKMTT	Hong Kong’s domestic top-up tax — a qualified domestic minimum top-up tax (QDMTT)
Schedule 63	Administration of Top-up Taxes	Returns, notifi­cations, the GIR and group filing, assess­ments, service providers, record retention
Schedule 64	OECD GloBE Rules Guidance	The list of OECD documents in accordance with which Part 4AA and Schedules 61–63 are to be construed
Schedule 65	Specified Person, Specified Return and Specified Year of Assessment for Purposes of Section 51AAB	Drives mandatory electronic filing of profits tax returns

The updating mechanism is built into the statute. Section 26AG: “The Secretary for Financial Services and the Treasury may, by notice published in the Gazette, amend the definition of OECD GloBE model rules in section 26AD(1); and Schedules 61, 62, 63 and 64.” This is the route by which future OECD guidance is meant to enter Hong Kong law — and we return to it below in the section on the January 2026 package.

A note on source access. The official portal elegislation.gov.hk is closed to automated access, as are hklii.hk and legislation.gov.hk. The Ordinance is quoted here from the Gazette copy hosted by the IRD, but machine extraction from that copy stops exactly at the start of Schedule 63 — the last text returned is the heading “Schedule 63 [ss. 25A, 26AD, 26AE, 26AF, 26AG & 79A & Schs. 62 & 63] Administration of Top-up Taxes”. No Big 4 or international law firm publication checked in preparing this article quotes any section of Schedules 61 to 63 verbatim. The section numbering of Schedule 63 used here is therefore reconstructed from cross-references inside sections 80O, 80P, 82 and 82A, which are readable verbatim, and from the Government’s Committee Stage Amendment paper (LC Paper No. CB(3)567/2025(01)). Where a statement rests on that reconstruction rather than on the Schedule text itself, this is said expressly; the content of Schedule 65 could not be obtained at all.

Who Is in Scope: The EUR 750 Million Threshold and the “Two of Four” Test

A multinational group falls within the global minimum tax and the HKMTT if its annual consolidated revenue is at least EUR 750 million in at least two of the four fiscal years immediately preceding the current fiscal year. The threshold is measured on the consolidated financial statements of the group’s ultimate parent entity.

Section 26AE(1) of Cap. 112 puts it this way:

“The GloBE rules have effect for implementing, in Hong Kong, the OECD GloBE model rules… to ensure that a multinational enterprise group, with an annual consolidated revenue of at least EUR 750 million… in at least 2 of the 4 fiscal years immediately preceding the current fiscal year, pays a minimum level… of tax at 15% on the income arising in each of the jurisdictions where it operates.”

The test is “at least two of four” — not “each of four” and not “any one of four”. That matters in practice: a group whose revenue oscillates around the threshold can enter the regime, drop out and re-enter, and each move changes its filing obligations.

For currency conversion the IRD points to the European Central Bank’s euro reference rates and to the Hong Kong Monetary Authority’s Monthly Statistical Bulletin. The Ordinance prescribes no internal rate of its own.

Purely Hong Kong groups are outside the regime. Paragraph 7 of the Government’s LegCo Brief: “Individual taxpayers, purely domestic groups, small and medium enterprises as well as excluded entities… will not be subject to the global minimum tax and HKMTT.” That is a deliberate design choice, distinguishing Hong Kong from a number of EU jurisdictions where the domestic top-up tax also reaches large purely domestic groups.

Excluded entities are carried across from Article 1.5 of the OECD Model Rules: a governmental entity; an international organisation; a non-profit organisation; a pension fund; an investment fund that is an ultimate parent entity; and a real estate investment vehicle that is an ultimate parent entity. Two ownership-based extensions are added — entities at least 95% owned by excluded entities and operating exclusively to hold assets or invest funds, and entities at least 85% owned by excluded entities whose income consists substantially of excluded dividends and equity gains.

A separate carve-out applies to the HKMTT alone. The IRD: “Investment entities and insurance investment entities are excluded from the scope of HKMTT so as to preserve their tax neutrality.” Investment entities are outside Hong Kong’s domestic top-up tax, but that does not automatically place them outside the GloBE rules themselves.

Filing obligations attach to four categories of person, which the Ordinance groups under the term Part 4AA entity:

•          Hong Kong constituent entities of an in-scope group;

•          Part 4AA stateless constituent entities — a stateless constituent entity created in Hong Kong, or a stateless permanent establishment in Hong Kong;

•          HK standalone joint ventures — a joint venture with no JV subsidiary located in Hong Kong;

•          HK members of a JV group — a joint venture or its JV subsidiary located in Hong Kong.

Practical consequence: the duty to notify the IRD falls on every Hong Kong entity of the group, not on one “head” entity. Relief for the others is available, but only by appointing a designated local entity — see the section on the notification.

What Is Actually in Force: The IIR, the HKMTT and the Deferred UTPR

Hong Kong has brought two of Pillar Two’s three mechanisms into force — the income inclusion rule and the domestic top-up tax; the third, the undertaxed profits rule, is enacted but its commencement is deferred.

The IIR and the HKMTT apply to fiscal years beginning on or after 1 January 2025. Section 26AE(6) and (8):

“The IIR top-up tax is payable in relation to a fiscal year beginning on or after 1 January 2025.” “The HKMTT is payable in relation to a fiscal year beginning on or after 1 January 2025.”

The trigger is the beginning of the fiscal year, not its end, and this is regularly got wrong. The consequences:

•          for a calendar-year group the first in-scope period is 1 January 2025 – 31 December 2025;

•          for a 31 March year-end group, the year ended 31 March 2025 began on 1 April 2024 and is out of scope; the first in-scope period is 1 April 2025 – 31 March 2026;

•          for a 30 June year-end group the first in-scope period is 1 July 2025 – 30 June 2026.

The UTPR is fully enacted; only the date is deferred. Section 26AE(7): “The UTPR top-up tax is payable in relation to a fiscal year beginning on or after a date specified by… the Secretary for Financial Services and the Treasury by notice published in the Gazette.” The IRD confirms: “The UTPR is to be implemented on a date to be specified by the Secretary for Financial Services and the Treasury at a later stage.”

As at August 2026 no Gazette notice bringing the UTPR into force has been published and no date has been announced. The IRD’s live page still refers to a future date.

The ordering between the mechanisms is stated expressly. The IRD says the HKMTT charges low-taxed Hong Kong entities “in priority over the IIR and UTPR”. That is the whole point of the design: Hong Kong collects the top-up itself so that another jurisdiction does not. The Government’s press release on passage puts the alternative bluntly: “the relevant top-up tax may be collected by other BEPS 2.0-implementing jurisdictions… Hong Kong’s taxing rights would then be ceded to other jurisdictions.”

The HKMTT is allocated among the group’s Hong Kong entities in proportion to income. The IRD: “the HKMTT is allocated among and charged on the Hong Kong constituent entities of an in-scope MNE group in proportion to each entity’s GloBE income.”

Were the UTPR switched on, it would operate as a backstop: top-up tax not collected under the IIR would be allocated to the group’s Hong Kong entities “by reference to the respective proportion of the employee headcount and the value of tangible assets”, and the group could designate one or more Hong Kong entities to pay it.

For the comparable mechanism in the United Arab Emirates, see UAE DMTT 2026: The 15% Top-Up Tax for Large Multinational Enterprises.

How the Hong Kong Effective Tax Rate Is Computed, and Why Jurisdictional Blending Decides Everything

The GloBE effective tax rate is computed by jurisdiction, not by company: every Hong Kong entity of the group is folded into a single calculation. The formula:

Top-up tax = (net GloBE income for the jurisdiction − substance-based income exclusion) × (15% − the jurisdictional effective tax rate)

The IRD describes the mechanics as follows: “If an MNE group is within the scope of the GloBE rules, the group must determine the location and income of each constituent entity, and compute the ETR on a jurisdictional basis”; the top-up tax is the product of “excess profits” and the “top-up tax percentage”, the former being “the aggregate GloBE income or loss for all constituent entities in the low-tax jurisdiction less a substance-based income exclusion” and the latter “the difference between the ETR in the low-tax jurisdiction and the minimum rate of 15%”.

The FSTB and IRD consultation paper states the rate computation directly: “The jurisdictional ETR is equal to the sum of the adjusted covered taxes of each constituent entity located in the jurisdiction for the fiscal year divided by the net GloBE income (if any) of the jurisdiction.”

Two conclusions follow from jurisdictional blending, and they change the logic of Hong Kong tax planning.

First: a single low-taxed Hong Kong entity can be sheltered by the rest. A company on the 5% patent box or a 0% ship-leasing rate does not create top-up tax by itself — it creates it only to the extent that it drags the group’s overall Hong Kong rate down.

Second, and the reverse is more dangerous: a successful offshore claim, exemption or enhanced deduction at one entity worsens the position of the whole Hong Kong sub-group. Exempt profit remains GloBE income of the Hong Kong jurisdiction while adding nothing to the numerator — covered taxes. The rate falls, and the HKMTT takes the difference up to 15%.

A de minimis exclusion removes the computation for small jurisdictional footprints. Under the FSTB and IRD consultation paper, top-up tax is deemed zero where both apply: “The average GloBE revenue of the MNE group in that jurisdiction for the current and two preceding fiscal years is less than EUR 10 million” and “The average GloBE income or loss of the MNE group in that jurisdiction for the same period is a loss or less than EUR 1 million”. This is a jurisdiction-level exclusion, not an entity-level one, and it will rarely be available for a large group’s Hong Kong footprint.

The Substance-Based Income Exclusion: How Much Profit Escapes the Top-Up

The substance-based income exclusion (SBIE) removes from the top-up base a slice of profit proportionate to real presence — payroll costs and the carrying value of tangible assets. In steady state it is 5% of eligible payroll costs and 5% of the carrying value of eligible tangible assets; during a ten-year transition the percentages are higher.

The FSTB and IRD consultation paper sets the end points — “5% of its eligible payroll costs” and “5% of the carrying value of eligible tangible assets” — and describes the transition: “The carve-out percentages start at 10% for payroll and 8% for tangible assets, tapering down to the normal rates of 5% over the 10-year transition period… For a fiscal year beginning in 2033, the percentages for both are at 5%.”

Fiscal year beginning in	Payroll carve-out	Tangible assets carve-out
2023	10.0%	8.0%
2024	9.8%	7.8%
2025 — Hong Kong’s first year	9.6%	7.6%
2026	9.4%	7.4%
2027	9.2%	7.2%
2028	9.0%	7.0%
2029	8.2%	6.6%
2030	7.4%	6.2%
2031	6.6%	5.8%
2032	5.8%	5.4%
2033 onwards	5.0%	5.0%

Reliability caveat: the year-by-year table sits in Article 9.2 of the OECD Model Rules and is carried into Schedule 61, but the Schedule text is not machine-readable from the available sources. The Hong Kong consultation paper gives only the start and end points. The percentages above are cross-checked against two independent sources: the Inland Revenue Authority of Singapore’s technical materials and Schedule 16 to the United Kingdom’s Finance (No. 2) Act 2023, which enacts the same Article 9.2 table verbatim — every line matches. They are also consistent with the rules’ own arithmetic: minus 0.2 percentage points a year on both measures for the first six years, then minus 0.8 for payroll and minus 0.4 for assets. Before relying on a figure for a specific year, it is still worth checking directly against Schedule 61 on e-Legislation.

The practical value of the SBIE in Hong Kong is limited, and that should be understood in advance. Hong Kong entities of international groups are typically trading, holding and treasury companies with small headcounts and almost no owned tangible assets. For a holding company with two employees and a leased office the SBIE is close to nil, which means the whole of its GloBE income is exposed to top-up tax. A manufacturing or logistics operation with a substantial payroll and owned property is protected considerably better.

Form IR1485 and the Group Code: The Step That Comes Before Everything Else

Form IR1485 is the application for a group code, and without it no notification can be filed through the Portal. Its official title is “Application for Group Code in respect of Multinational Enterprise Group, HK Standalone JV or JV Group”.

The form is filed on paper. The IRD states that Form IR1485 “should be submitted to the Department in paper form” — it is not a Portal submission. It is the only paper element in the entire chain, and it is the one that most often turns out to be the critical path.

Each in-scope group is assigned a unique MNE code. The Portal FAQ: “An MNE code is assigned to each in-scope MNE group and a JV code is assigned to each JV group or HK standalone JV.” The user guide states the applicant’s side of it: “A unique MNE code must be obtained for each in-scope MNE group. If the Notifying Entity is a HK standalone JV or a HK member of a JV group, it must obtain a JV code in addition to the MNE code.”

The form captures the ultimate parent entity’s details, including its business address, which are then pre-populated into the notification. Where the parent’s jurisdiction issues no tax identification number, the value “NOTIN” is entered — and the Portal FAQ says exactly where: “Please input ‘NOTIN’ in Item 4(b)(iii) under Part 2 and / or Item 2(c) under Part 3 of Form IR1485.”

There is no statutory deadline for Form IR1485. It is an administrative prerequisite rather than a freestanding obligation. The binding constraint is the notification deadline: the group code must be in hand within six months of the fiscal year end. The IRD publishes no processing service standard for the form.

Author’s assessment: in autumn 2025 the IRD did not wait for applications and wrote first. The Department issued bulk letters to groups it had identified as potentially in scope, asking them to confirm their status, submit Form IR1485 and return a reply slip within two months of the date of the letter. On KPMG’s account the letter carried four appendices — a summary of the key filing and registration requirements, the reply slip, Form IR1485 itself and a list of the group’s Hong Kong entities. On dating: BDO says “late September 2025”, while KPMG, writing on 13 October 2025, describes the letters as “recently issued”; there is no IRD press release, circular letter to tax representatives or other statement about the exercise, so the date is given as a secondary-source estimate rather than a confirmed fact.

The Top-Up Tax Notification: Six Months, and Not a Day More

The top-up tax notification is due within six months after the last day of the reporting fiscal year. The deadline is unconditional.

The IRD: “A top-up tax notification is required to be filed within six months after the last day of the reporting fiscal year.” The Portal user guide, edition 01/2026, repeats it: “A top-up tax notification is required to be filed within six months after the end of the fiscal year of the in-scope MNE group.”

The statutory basis is section 5(1) of Schedule 63 to Cap. 112. This is established from section 80P(3), which is readable verbatim: “A person who is a service provider engaged to carry out a Part 4AA entity’s obligations under section 5(1) of Schedule 63 commits an offence if the person, without reasonable excuse, fails to cause a notice to be filed as required by that section.” A Government Committee Stage Amendment added the words “beginning on or after 1 January 2025” to section 5(1), confining the obligation to the same fiscal years as the charge.

A common error: the eighteen-month extension does not touch the notification. The extension to 18 months applies only to the return, and only in the group’s transition year. The notification deadline is six months, full stop.

The notification is electronic only. The IRD: “A Part 4AA entity of an in-scope MNE group must file a top-up tax notification and a top-up tax return in the form of an electronic record using a system designated by the Commissioner.” The designated system is the Pillar Two Portal: “Pillar Two Portal is a system designated by the Commissioner of Inland Revenue under Part 4AA of the Inland Revenue Ordinance.” There is no paper notification form.

One entity may be appointed to file for all. The IRD: “Hong Kong constituent entities of an in-scope MNE group are allowed to appoint one designated local entity to file a top-up tax notification so as to relieve other Hong Kong constituent entities from the filing obligation.” Without that appointment, every Hong Kong entity of the group carries the obligation separately.

What the notification actually captures. Per the IRD user guide: the type of notifying entity; the MNE code and the ultimate parent entity’s tax identification number or business registration number; a JV code where the filer is a joint venture; the start and end dates of the group’s fiscal year; up to five industry sectors; the parent’s name and business address, pre-filled from Form IR1485; the consolidated revenue figure with currency and the exchange rate used to convert into euros; tick-boxes identifying the fiscal years in which revenue reached EUR 750 million; and a complete list of all Hong Kong entities of the group — by business registration number or, failing that, by name, entered on screen or uploaded as a UTF-8 encoded CSV file.

The critical block is where the group will file its GloBE Information Return. The form requires the group to state whether group GloBE filing is intended in Hong Kong (and by whom — the ultimate parent or a designated filing entity), or outside Hong Kong (giving the designated filing entity’s name, TIN, business address and jurisdiction of tax residence), or whether group local filing is intended. This is not a housekeeping field: the route chosen determines whether the Hong Kong entities must file the GIR themselves.

The notification also records the group’s Pillar Two history — whether its entities were subject to a qualified IIR or UTPR in Hong Kong, whether the HKMTT applied, and whether a qualified IIR or UTPR applied outside Hong Kong. Those answers determine whether the group gets fifteen months or eighteen for its return.

A filed notification can be corrected only in part. The list of Hong Kong entities may be amended by submitting a revised list with a reason for the amendment; everything else can be corrected only by sending an e-message through the Business Tax Portal business account. An acknowledgement is generated on successful submission.

The Pillar Two Portal: Two Phases, the e-Cert, and Why a Personal Certificate Will Not Do

The Pillar Two Portal is the only channel for filing top-up tax notifications and returns; Phase 1 opened on 19 January 2026 and Phase 2 is stated for the fourth quarter of 2026.

The IRD: “The first phase of the Pillar Two Portal has been launched to allow Part 4AA entities to file annual top-up tax notifications relating to their obligations of filing top-up tax returns”, and: “The second phase will be launched in the fourth quarter of 2026 to accommodate the filing of top-up tax returns, as well as the viewing and downloading of notices of top-up tax assessments.”

So: Phase 1 is notifications only (plus GIR test-file validation); Phase 2 is returns and notices of assessment. As at 20 August 2026 Phase 2 has not launched. The most recent Pillar Two entries in the IRD’s news record are 14 May 2026 on the GIR MCAA signature and 8 June 2026 on the GIR XML Schema update; the Department’s press release archive carries nothing on the subject since 28 May 2025. The citable position remains the IRD’s own “fourth quarter of 2026”; an “October 2026, tentatively” indication appears in a professional body’s reposting of the IRD notice and is not corroborated on the Department’s own site.

The Portal is not a separate system but an extension of the Business Tax Portal. The IRD: “The Pillar Two Portal is an extended function of the Business Tax Portal (BTP)”; “entities which are required to file top-up tax notifications for the MNE groups (notifying entities) have to register their dedicated business accounts under the BTP”. No separate registration is needed: “Separate registration for a Pillar Two Account is not required.”

The business account is registered by a Responsible Person, who may be a director, company secretary, liquidator, authorised representative of a non-Hong Kong company, partner, general partner, investment manager, principal officer or sole proprietor. Entities without a business registration number must obtain a Business Registration Number Equivalent from the IRD.

The certificate requirement is the most underestimated barrier, and the IRD has stated it in three separate answers.

•          the main regime page: “The individuals who are authorised to sign and submit top-up tax notifications and top-up tax returns on behalf of the notifying entities are required to use their e-cert (Organisational) with AEOI Functions for the purposes of authentication”;

•          the Portal FAQ on personal certificates: “An e-Cert (Personal) cannot be used for authentication under the Pillar Two Portal”;

•          the Portal FAQ on ordinary organisational certificates: “An e-Cert (Organisational) with AEOI Functions must be used. An e-Cert (Organisational) is not accepted by the Pillar Two Portal for authentication. The Part 4AA entity may choose to add the new feature of AEOI functions when renewing the existing certificate.”

All three limits apply at once: the certificate must be organisational, must carry AEOI Functions, and must be issued by the Hongkong Post Certification Authority. A personal certificate will not work; nor will an ordinary organisational certificate without AEOI Functions. Note the last sentence of the third quotation: AEOI Functions can be added to an existing certificate at renewal rather than requiring a new one from scratch.

A group already filing country-by-country reports in Hong Kong can reuse its existing certificate. The IRD: “The Part 4AA entity can use the same e-Cert (Organisational) with AEOI Functions for authentication under the Pillar Two Portal.” If the certificate password is lost there is no recovery: the certificate is revoked and a new one applied for.

The certificate’s terms are those of the ordinary e-Cert (Organisational): the AEOI Functions carry no separate fee and no separate validity period. Eligible applicants are “Bureaux and Departments of the Government of Hong Kong SAR, organisations that hold a valid business registration certificate issued by the Government of the Hong Kong SAR and statutory bodies of Hong Kong”; an organisation without a business registration certificate may instead supply a reference letter issued by the IRD. The validity period is chosen at application — one year or two. The forms are the base CPos 798F and the supplementary CPos 798FA.

The cost has two components. The promotional subscription fee for the certificate is HK$47 for one year and HK$188 for two years on a first application, and HK$141 for one year on renewal. On top of that an administration fee applies: HK$150 where the application contains only one-year certificates, and HK$300 where the longest validity is two years; the e-Cert Token is charged separately. Reliability caveat: Hongkong Post’s fee table does not extract consistently — successive fetches map the amounts differently as between first applications and renewals, so the specific figure should be checked against the live tariff page before payment.

The distinction between a service provider and a tax representative catches people out. A service provider engaged under section 13 of Schedule 63, and a tax representative appointed for global minimum tax purposes, may act as a Service Agent. But the Portal FAQ is unambiguous: “A tax representative, if not engaged as a service provider… is not allowed to file a top-up tax notification/top-up tax return on behalf of its client” — such representatives may only view submissions and lodge objections. Service providers must in addition register a Tax Representative Portal business account.

The practical point: the access chain has four sequential steps and none of them is instant — the paper Form IR1485 and its processing by the Department; registration of a BTP business account with a Responsible Person; an e-Cert with AEOI Functions for every signer; and only then the filing itself.

The Top-Up Tax Return: 15 Months, 18 Months, and the Transition-Year Trap

The top-up tax return is due no later than fifteen months after the last day of the reporting fiscal year; for the group’s transition year the deadline is extended to eighteen months.

The IRD: “Each Hong Kong constituent entity of an in-scope MNE group is required to furnish a single top-up tax return for the purposes of the GloBE rules and HKMTT (top-up tax return) in a prescribed manner and form no later than 15 months after the last day of the reporting fiscal year”, and: “The filing deadline for the first transition year of any constituent entities of the MNE group is extended to 18 months.” The statutory basis is section 3(1) of Schedule 63.

The transition-year trap. The eighteen months are not given to everyone filing for 2025, but only to groups for which 2025 is the transition year — the first year the group came within the GloBE rules at all.

The practical consequence is serious. A group whose parent sits in a jurisdiction that applied a qualified IIR from 2024 — an EU Member State, the United Kingdom, Japan, the Republic of Korea — has already had its transition year. Such a group gets only fifteen months in Hong Kong. That is precisely why the Hong Kong notification asks whether the group’s entities were subject to a qualified IIR or UTPR outside Hong Kong in earlier years.

The return incorporates the GloBE Information Return data. The IRD: “The top-up tax return includes information required in the standardised GloBE Information Return (GIR).”

One Hong Kong entity may be designated to file for all, but the designation covers a single reporting fiscal year and must be renewed annually.

Assessment, payment and objection work differently from profits tax, and the differences are worth noticing.

•          “A notice of assessment and demand for top-up tax is to be issued based on the information declared upon the filing of the top-up tax return.”

•          “No provisional top-up tax is charged. The payment due date is one month after the expiry of the return filing deadline or the date of the notice of assessment, whichever is the later.”

•          “The objection period to a top-up tax assessment is two months after the date of the notice of assessment.”

Two departures from the ordinary regime stand out: there is no provisional top-up tax, unlike provisional profits tax; and the objection window is two months rather than the one month allowed by section 64(1) of Cap. 112. The general mechanics of disputes with the Department are covered in Disputing an IRD Assessment in 2026.

A problem that is not yet widely discussed: there is currently nowhere to file the return. The first return for a calendar-year group falls due on 31 March or 30 June 2027, but returns can only be filed once Phase 2 of the Portal goes live, stated for the fourth quarter of 2026. There is no paper alternative: filing must be “in the form of an electronic record using a system designated by the Commissioner”.

The GloBE Information Return: XML, Central Filing and the Agreement of 21 April 2026

The GloBE Information Return (GIR) is filed in XML to the OECD schema, and since April 2026 Hong Kong participates in the international exchange of these returns, allowing a group to file the GIR once, in one jurisdiction.

The IRD: “A GIR must be made in the form of a XML document” and “A Part 4AA entity should prepare the GIR in accordance with the XML Schema and the user guides set out below”. Three technical documents govern: the GIR XML Schema (OECD, January 2025), the GIR XML Schema User Guide (OECD, January 2025) and the IRD’s own Supplementary User Guide for Preparing GIR.

The technical constraints are fixed and known in advance. Per the Portal FAQ: the file is prepared “in Extensible Markup Language format per GIR XML Schema specifications”; “Maximum recommended file size is 200MB after being compressed, signed and encrypted”; encryption uses a separate tool with the same e-Cert (Organisational) with AEOI Functions; the encryption tool requires 4GB of free memory and Java Standard Edition 21; test files must carry GIR101 in the MessageTypeIndic element for new data or GIR102 for corrections, and in the DocTypeIndic element OECD11 for new test data, OECD12 for corrected data and OECD13 for deletions. A single file may not mix new records (OECD11) with corrections (OECD12 or OECD13) — and it is that field, not the message type, that most often causes an upload to be rejected.

Test filing is available and is not treated as filing. The IRD: “Part 4AA Entity can prepare test data file of GIR and submit it to the Pillar Two Portal for validation testing purpose”, and “The test data will not be treated as GloBE information return to be filed by a Filing Entity”. This is the only way to validate the XML before the deadline, and it should be used early.

The GIR has no separate deadline: the information forms part of the return and rides on the same fifteen or eighteen months.

On 21 April 2026 Hong Kong signed the multilateral agreement on the exchange of GIRs. The IRD: “On 21 April 2026, Hong Kong signed the Multilateral Competent Authority Agreement on the Exchange of Global Anti-Base Erosion Information (‘GIR MCAA’)”, and: “With Hong Kong’s signing of the GIR MCAA, in-scope MNE groups may effect group GloBE filing in or outside Hong Kong in accordance with section 6 of Schedule 63 to the IRO.”

The practical effect is that Hong Kong entities are relieved of filing the GIR where it is filed in a jurisdiction able to exchange with Hong Kong. The IRD: “Hong Kong constituent entities of an in-scope MNE group will be relieved from the obligation to file the GIR information if such information is filed in a jurisdiction that will be able to exchange GIR information with Hong Kong.”

The fallback where exchange fails was softened relative to the Bill. Section 7(1) of Schedule 63 originally required local GIR filing “within 30 days”; the Committee Stage Amendment replaced that with “by the specified deadline”, defined as the later of sixty days after the date of the Commissioner’s notice and the date specified in that notice. The Government described the purpose plainly: “the proposed time limit for filing a Global Anti-Base Erosion information return, if exchange mechanisms fail, is extended to reduce the compliance burden.”

Mandatory Electronic Filing of Profits Tax Returns, and iXBRL

Entities of in-scope groups must file their ordinary profits tax returns electronically, from a year of assessment beginning on or after 1 April 2025 — that is, from 2025/26. This is a separate obligation, unconnected to the top-up tax return.

The IRD: “Entities of in-scope MNE groups are mandated to e-file their profits tax returns for a year of assessment beginning on or after 1 April 2025”; “The mandatory e-filing requirement applies to Profits Tax Return – Corporations (BIR 51) and Profits Tax Return – Persons Other Than Corporations (BIR 52)”; and “If a phase 1 applicable entity is mandated to e-file its profits tax return for a year of assessment, the entity will be mandated to e-file for every subsequent year.”

The statutory route is the amended section 51AAB of Cap. 112 plus the new Schedule 65. Section 51AAB itself: “A person who is required under section 51(1) to furnish a specified return for a specified year of assessment must file it in the form of an electronic record if the person is a specified person for that year of assessment.” The IRD confirms: “This mandatory e-filing requirement is given effect to by amending section 51AAB of the IRO and adding Schedule 65 to the IRO under the Amendment Ordinance.”

Financial statements and the tax computation are uploaded in iXBRL. The IRD: “Financial statements and tax computation to be uploaded should be prepared in inline eXtensible Business Reporting Language (iXBRL) format and in accordance with the IRD Taxonomy Package.” Supplementary forms S1 to S22 must be filed electronically regardless of how the return itself is filed.

The semi-electronic route is closed to these entities. The IRD puts it in one sentence: “Semi-electronic filing mode is not applicable to entities of in-scope multinational enterprise groups subject to mandatory electronic filing.”

Practical consequence: an entity of an in-scope group cannot file a paper control sheet with electronic data. It must file the full electronic return with iXBRL-tagged financial statements and tax computation. For groups that have until now filed on paper through their auditor, that means rebuilding the year-end close process, not merely changing the filing channel. The wider annual compliance picture for a Hong Kong company is set out in Mandatory Annual Compliance for Hong Kong Companies 2026.

Safe Harbours: The Transitional CbCR Test, the QDMTT Safe Harbour, and What the January 2026 OECD Package Changed

Hong Kong provides four simplification mechanisms: the transitional country-by-country reporting safe harbour, the transitional UTPR safe harbour, the QDMTT safe harbour and simplified calculations for non-material constituent entities.

The IRD: “The transitional Country-by-Country Reporting Safe Harbour, the transitional UTPR Safe Harbour, the QDMTT Safe Harbour and the Simplified Calculations Safe Harbour for non-material constituent entities are provided in Hong Kong.” All sit in Part 3 of Schedule 61; section 26AE(3): “Part 3 of Schedule 61 provides for various transitional and permanent safe harbours in relation to the implementation…”.

The transitional CbCR safe harbour removes the full GloBE computation if any one of three tests is met, using data from a qualified country-by-country report:

•          the de minimis test — “The group reports total revenue of less than EUR 10 million and profit (loss) before income tax of less than EUR 1 million”;

•          the simplified ETR test — “The group has a simplified ETR that is equal to or greater than the transition rate… 15% for fiscal years beginning in 2023 and 2024, 16% for 2025, and 17% for 2026”;

•          the routine profits test — “The group’s profit (loss) before income tax… is equal to or less than the SBIE amount, for constituent entities resident in that jurisdiction”.

For Hong Kong’s first in-scope year the simplified ETR hurdle is 16%, not 15%. For fiscal years beginning in 2026 it rises to 17%.

Author’s assessment: this is the figure most often got wrong. A Hong Kong sub-group paying 16.5% profits tax on its unsheltered profits does not clear the test automatically: the simplified ETR is computed from financial data including deferred tax and takes in concessionary-rate income, so it slips below 16% more easily than expected.

The QDMTT safe harbour is the central mechanism for Hong Kong, and the HKMTT qualifies for it. The IRD: “If certain conditions are met, in-scope MNE groups can benefit from the QDMTT Safe Harbour, which deems the GloBE top-up tax payable by the group in Hong Kong as zero.” The LegCo Brief: “HKMTT design meets QDMTT requirements; top-up tax paid is creditable against GloBE rules, deeming liability as zero.”

But the safe harbour is not unconditional. A Government Committee Stage Amendment specifically supplemented Part 3 of Schedule 61 with new sections 24A and 24B setting out “certain situations where the QDMTT safe harbour does not apply” — notably cases involving securitisation entities and cases where particular tax attributes are not excluded from the computation. The proposition “pay the HKMTT and nothing further need be computed” is not correct as a general rule.

Hong Kong grants QDMTT recognition outbound as well: top-up tax for another jurisdiction is deemed zero where that jurisdiction operates a qualified domestic minimum top-up tax meeting the OECD’s additional standards.

Hong Kong obtained transitional qualified status with effect from 1 January 2025. The IRD: “Hong Kong has obtained transitional qualified status for its IIR, HKMTT and QDMTT Safe Harbour from 1 January 2025” and “Hong Kong has been included in the OECD’s central record of legislation with transitional qualified status.” The grant covers three things at once — the IIR as a Qualified IIR, the HKMTT as a QDMTT, and QDMTT Safe Harbour status for the HKMTT — and it is the third that matters commercially. It is what allows a foreign parent to treat Hong Kong top-up tax as fully discharging the group’s GloBE liability for Hong Kong without re-running the computation.

Reliability caveat: the OECD central record is not machine-readable — its page is script-generated. Hong Kong’s status is verified from the IRD’s own statement, a Level 1 source, but not from the OECD record directly. One refinement is worth making: the status takes effect from 1 January 2025, but that does not mean Hong Kong has appeared on the record since that date. The central record update of 18 August 2025 did not yet list Hong Kong; by 5 January 2026 the status is described as settled. The exact date of the entry could not be established from any reachable source, so the safe formulation is the IRD’s own: the status was obtained “from 1 January 2025”, without asserting a publication date on the record.

What the “Side-by-Side” Package Does Not Switch Off for Hong Kong

The OECD side-by-side package, agreed in December 2025 and released on 5 January 2026, switches off the IIR and the UTPR for groups whose parent sits in a qualifying jurisdiction — but it does not switch off domestic top-up taxes, and the HKMTT is one.

Timeline. Political agreement was reached in December 2025 — the OECD press release “International community agrees way forward on global minimum tax package”. The package documents were released on 5 January 2026. “The January 2026 package” is correct as to publication; the agreement itself dates from December 2025.

How the safe harbour works. It is elective and available to a group whose ultimate parent is located in a jurisdiction with a qualified SbS regime; the effect is a deemed top-up tax of zero under both the IIR and the UTPR for all of the group’s constituent entities. As at 5 January 2026 the United States is the only jurisdiction with a qualified SbS regime.

The key limitation is stated directly in the commentary. PwC Hong Kong: “The SbS safe harbour does not affect the operation or application of QDMTTs. As such, in-scope MNE groups electing this safe harbour are still expected to remain fully subject to QDMTTs.” Holland & Knight: “the SbS Safe Harbor does not eliminate the 15 percent rule itself or QDMTTs.”

The conclusion for Hong Kong: Hong Kong entities of a US-parented group that elects the side-by-side safe harbour remain fully within the HKMTT. They must still compute the Hong Kong effective tax rate, pay any top-up tax, file the notification and file the return.

What the package does change for such a group is upstream: it removes the risk of a US or third-country IIR or UTPR charge on Hong Kong profits. But that is precisely the risk Hong Kong was already closing off through the HKMTT and its QDMTT Safe Harbour status.

The January 2026 package contains three further safe harbours, and one of them is potentially significant for Hong Kong.

Safe harbour	What it does	Relevance for Hong Kong
Side-by-Side	Deems IIR and UTPR top-up tax to zero for groups parented in a qualifying jurisdiction; currently only the United States	Does not reach the HKMTT
UPE Jurisdiction	Deems the UTPR to zero for the parent’s own jurisdiction only, where the minimum rate is 15%	Indirect; no effect on Hong Kong top-up tax
Simplified ETR	Deems top-up tax to zero where a jurisdiction’s simplified ETR is at least 15%; applies to fiscal years commencing on or after 31 December 2026, or on or after 31 December 2025 where the jurisdiction so elects and conditions are met	The intended permanent successor to the transi­tional CbCR safe harbour; during the overlap the taxpayer chooses between the two
Substance-Based Tax Incentive	Treats qualified incentives as additional taxes within a substance cap — 5.5% of the greater of eligible payroll costs or depreciation of eligible tangible assets	Potentially the most significant: the mechanism capable of partially rehabilitating Hong Kong-style incentives

The same package extends the transitional CbCR safe harbour. According to PwC Hong Kong, the extension covers “fiscal years commencing on/before 31 December 2027 and ending on/before 30 June 2029” — moving both limbs on by one year from the original sunset.

An open point worth stating plainly: as at August 2026 no Gazette notice under section 26AG bringing the January 2026 package into Hong Kong law could be found, and the IRD’s dedicated page makes no reference to the side-by-side system, to the extension of the transitional safe harbour, or to any 2026 OECD guidance.

The limits of that statement should be drawn honestly. Checked: the IRD regime page; the IRD news record (the most recent Pillar Two entries being 14 May 2026 on the GIR MCAA signature and 8 June 2026 on the GIR XML Schema update); Big 4 tax-news indices for 2026; and targeted searches. But the electronic Gazette at egazette.gld.gov.hk is a script-driven application that cannot be searched programmatically, so Legal Supplement No. 2 for 2026 could not be inspected directly. This is a notice not found, not an absence proved.

Author’s assessment: two readings are possible and neither should be presented as fact. Either Hong Kong has not yet legislated the package — in which case Hong Kong law contains the un-extended transitional safe harbour. Or the package is picked up automatically through section 26AF, which requires Part 4AA and Schedules 61–63 to be construed “in accordance with the OECD GloBE rules guidance” — but that definition itself sits in Schedule 64 and is amended by the same section 26AG notice. This is the one genuinely open question in the regime, and it should be checked on e-Legislation before any decision is taken on it.

What Happens to Offshore Claims, the Patent Box, the R&D Deduction and the Shipping Concessions

For a group within scope, Hong Kong’s tax advantages largely stop working: each of them reduces tax paid without reducing GloBE income, so each drags the effective rate down — and the HKMTT takes the difference up to 15%.

The Government acknowledged this in the document laid before the Legislative Council. Paragraph 17 of the LegCo Brief: “a number of in-scope Hong Kong-headquartered MNE groups and foreign-headquartered MNE groups may have ETRs below 15% in Hong Kong due to foreign profit exemptions and preferential regimes”, and in fuller terms: “IRO exempts various income, profits and gains (e.g. foreign-sourced profits, capital gains and dividends in general) from the charge to profits tax. It also provides preferential tax regimes for specified business sectors.”

Two-tiered profits tax rates: economically dead for these groups. The rates are 8.25% on a corporation’s first HK$2,000,000 of assessable profits and 16.5% above that. The maximum benefit is HK$2,000,000 × 8.25% = HK$165,000 a year per group of connected entities, since the regime is already confined to one nominated entity. Against a group with revenue of EUR 750 million or more this is immaterial, and it is clawed back once the blended rate falls below 15%.

Offshore claims: worth one and a half percentage points, not sixteen and a half. A successful claim removes profit from the profits tax charge entirely, but that profit remains GloBE income of the Hong Kong jurisdiction and adds nothing to covered taxes. For an in-scope group a successful offshore claim converts a 16.5% profits tax liability into a 15% HKMTT liability — a saving of one and a half percentage points against the full cost of building and defending the position. The mechanics of the claim itself are covered in Territorial Taxation and Offshore Status in Hong Kong 2026and The Offshore Profits Claim in Hong Kong.

The FSIE regime produces an unexpected inversion. Where FSIE bites, tax is paid and the effective rate rises. Where the economic substance carve-out or the participation exemption applies, the income is untaxed but remains Hong Kong GloBE income and pushes the rate down. Meeting the FSIE substance requirement — unambiguously the right outcome before Pillar Two — can therefore produce an HKMTT charge instead of a saving.

Patent box: a ten-point gap. The concessionary rate is 5% on eligible intellectual property income and applies to years of assessment beginning on or after 1 April 2023. A standalone Hong Kong IP holding structure will be topped up to 15%; blended with other Hong Kong income it may survive. The regime is analysed in Hong Kong Patent Box 2026.

The enhanced R&D deduction: the most exposed item of all. The deduction is 300% on the first HK$2,000,000 of qualifying Type B expenditure and 200% on the balance with no cap. Author’s assessment: an enhanced deduction is a permanent difference that reduces Hong Kong tax without reducing GloBE income, which is computed from accounting profit. It shrinks the numerator of the effective-rate fraction while leaving the denominator untouched — by construction the most rate-destructive category of incentive there is. For an in-scope group with material research spend, the super-deduction is clawed back directly by the HKMTT.

Shipping and aircraft leasing: the deepest concessions and therefore the most exposed. For aircraft leasing the taxable amount is deemed to be 20% of gross lease payments less deductible expenses, excluding depreciation allowances, taxed at 8.25%. A qualifying ship lessor’s profits attract a concessionary rate that expressly includes nil: the IRD’s notes to Supplementary Form S12 refer to “the concessionary tax rate (including a tax rate of 0%) specified in Schedule 8C of the IRO” — so the rate itself is set by Schedule 8C to Cap. 112, not by the charging section.

There is an exclusion here that is usually described as protection, but it does not protect what people assume it protects. International shipping income is removed from GloBE income by Article 3.3 of the OECD Model Rules, carried into Schedule 61. Author’s assessment: ship leasing falls within that exclusion only partly, and the most common Hong Kong model most likely falls outside it entirely.

The text of Schedule 61 is not readable from the available sources, so the boundaries below are taken from the word-for-word identical provision enacted in the United Kingdom’s Finance (No. 2) Act 2023, sections 157 and 158, and from HM Revenue & Customs’ guidance:

•          a time charter or other lease of a ship “fully equipped, crewed and supplied” for international shipping is a core activity and is excluded in full;

•          a bareboat charter to a member of the same group, for that member’s core international shipping activity, is likewise core and excluded in full;

•          a bareboat charter to a third party is ancillary only, and only where the lease does not exceed three years — and ancillary income is excluded only up to 50% of core international shipping profits;

•          a bareboat charter to a third party for more than three years, and finance leases of that kind, appear in neither list — that is, they fall outside the exclusion altogether.

Practical conclusion: Hong Kong’s ship leasing regime mostly serves long-term bareboat and finance leasing to unrelated operators — and precisely that model sits outside the international shipping exclusion and is therefore fully exposed to the HKMTT. Reliability caveat: no Hong Kong source applying Article 3.3 to the sections 14P–14T regime of Cap. 112 could be found; the analysis rests on the identical United Kingdom text and remains subject to checking against Schedule 61.

The consequence in one line. For an in-scope group the Hong Kong tax question stops being “how do we get below 16.5%?” and becomes “how do we stay at or above 15%?”. Every concession that takes the blended Hong Kong rate under 15% simply moves money from the profits tax line to the HKMTT line.

One thing materially softens this for the next few years, and it is temporary. The transitional CbCR safe harbour can deem the Hong Kong top-up tax to zero on country-by-country reporting figures, without any of the analysis above — for fiscal years beginning on or before 31 December 2026, or 2027 if the extension is adopted into Hong Kong law. Many groups will not feel the interaction described here until 2027 or 2028.

The Nature of the Top-Up Tax, Credit for Foreign QDMTT, and Deductibility

Top-up tax collected in Hong Kong under Part 4AA is deemed to be profits tax — but selectively, and the selectivity matters more than the deeming. The Ordinance does not append words to the old definition; it inserts a new two-limb definition into section 2(1):

“profits tax (利得稅) — (a) in this Ordinance (except in a reference to profits tax under Part 4 (however worded) or to provisional profits tax), means, subject to paragraph (b) — (i) profits tax under Part 4 (including provisional profits tax under Part 10B); or (ii) top-up tax under Part 4AA; or (b) in Parts 4, 7, 8AA, 8A, 9A and 10B and Schedules relating to provisions of those Parts, in sections 50AAA and 50AAAB and Schedule 54, in section 59(1B), (1C) and (1D) and in Schedules 16D and 16E, means profits tax under Part 4 (including provisional profits tax under Part 10B).”

Author’s assessment: paragraph (b) switches the deeming off inside Part 4 itself — the part of the Ordinance where the deduction rules live. The deeming works for the administrative machinery (assessment, collection, objections, treaty access) but does not carry the top-up tax into the meaning of “profits tax” within Part 4.

Paragraph 20 of the LegCo Brief: “We propose to deem the top-up tax imposed in Hong Kong under the GloBE rules and HKMTT as profits tax.” The press release on passage: “the top-up tax to be collected in Hong Kong will be deemed as profits tax so that the relevant existing tax administration mechanisms in the IRO can be applied. Where applicable, taxpayers can ride on Hong Kong’s Comprehensive Avoidance of Double Taxation Agreements or Arrangements signed with other countries or regions for resolving cross-border disputes.”

On foreign top-up taxes the new section 50AAAD draws three distinctions, and the first is a denial. Its heading: “Tax credits denied, or allowed, for certain foreign top-up taxes”.

•          Subsection (1) denies credit: “Neither a foreign IIR top-up tax, nor a foreign UTPR top-up tax, is to be allowed as a credit against tax payable in Hong Kong under section 50…”.

•          Subsection (2) allows credit for a domestic top-up tax: “A foreign DMTT is to be allowed as a credit against tax payable in Hong Kong under section 50 only to the extent to which the foreign DMTT is — (a) a QDMTT payable in a territory in respect of income of a permanent establishment in that territory; or (b) a QDMTT payable in a case described in section 50(5)(c), (7)(a) or (7A)…”.

•          Subsection (3) treats a foreign DMTT as a “similar tax” for sections 50AAA and 50AAAB within the same limits.

Practical conclusion: only a foreign QDMTT is creditable, and only in the cases drawn by subsection (2); foreign IIR and UTPR charges are not creditable at all. The words “only to the extent to which” mean partial rather than full relief, and it is given under section 50 as double taxation relief, not as a deduction from the base.

Author’s assessment: Hong Kong top-up tax is most likely not deductible in computing assessable profits — but on the plain words of the prohibition, not through the deeming. Section 17(1)(g) of Cap. 112 denies a deduction for “any tax paid under this Ordinance”, and Part 4AA top-up tax is a tax paid under that same Ordinance, whether or not it falls within the meaning of “profits tax” inside Part 4. No Level 1 source states this expressly; it is presented as an inference, and the route matters: arguing non-deductibility from the “deemed profits tax” premise would be wrong, because paragraph (b) of the new definition removes precisely that deeming within Part 4.

The HKMTT is not a covered tax for effective-rate purposes — otherwise the computation would be circular.Instead it is credited against, and reduces to nil, the GloBE top-up tax otherwise payable for the jurisdiction; the Hong Kong expression of that outcome is the QDMTT Safe Harbour. Ordinary profits tax remains a covered tax in the normal way — it is what generates the Hong Kong numerator.

Treaty access follows from the same deeming. Whether treaty partners will accept a domestic top-up tax as a tax covered by the relevant agreement is a separate question that unilateral deeming cannot settle. The residence certification process is covered in Hong Kong Certificate of Resident Status 2026.

Penalties: Why Level 3 Is Not the Point

The Ordinance inserts two new penalty sections into Cap. 112 — section 80O for entities and section 80P for service providers — and amends sections 82 and 82A.

Section 80O is headed “Minimum tax for MNE groups: offences by Part 4AA entities”. An offence arises where an entity, “without reasonable excuse”, fails to comply with section 3(1) of Schedule 63 (the return), section 5(1) of Schedule 63 (the notification) or a notice under section 12(1) of Schedule 63, or files a return “that is misleading, false or inaccurate in a material particular”.

Breach	Conse­quence
Failure to file the top-up tax return (Sch. 63 s. 3(1))	Fine at level 3 (HK$10,000) plus a further fine of treble the top-up tax under­charged
Failure to file the top-up tax notifi­cation (Sch. 63 s. 5(1))	Fine at level 3 plus treble the top-up tax under­charged
Failure to comply with a notice under Sch. 63 s. 12(1)	Fine at level 3
Return that is mis­leading, false or inaccurate in a material particular	Fine at level 3 plus treble the top-up tax under­charged
Failure to comply with a court order made under s. 80O(6)	Fine at level 4 (HK$25,000)
Wilful evasion — s. 82(1AAD), summary conviction	Level 3 + treble the tax + 6 months’ imprison­ment
Wilful evasion — on indictment	Level 5 (HK$50,000) + treble the tax + 3 years’ imprison­ment
Additional tax in lieu of prosecu­tion — s. 82A(1L)	Up to treble the top-up tax under­charged
Service provider: failure to cause the return or notifi­cation to be filed (s. 80P)	Fine at level 3
Service provider: failure to comply with a court order	Level 6 (HK$100,000)

The fine levels come from Schedule 8 to the Criminal Procedure Ordinance (Cap. 221): level 1 — HK$2,000; level 2 — HK$5,000; level 3 — HK$10,000; level 4 — HK$25,000; level 5 — HK$50,000; level 6 — HK$100,000.

A compulsion mechanism sits separately in the section and is routinely overlooked. Section 80O(6): “In case of an offence under subsection (1)(a), the court may order the Part 4AA entity, within a time specified in the order, to do the act that the entity has failed to do.” Subsection (7): “Any Part 4AA entity that does not comply with an order of the court under subsection (6) commits an offence and is liable on conviction to a fine at level 4.” So a level 4 fine does exist in the Part 4AA regime — but it punishes non-compliance with a court order to file, not the failure to file itself. All four levels — 3, 4, 5 and 6 — are therefore engaged.

Author’s assessment: the fine itself is irrelevant — HK$10,000 is not a sanction against a group with revenue of EUR 750 million or more. The real consequences are three: the further fine of treble the top-up tax undercharged; additional tax under section 82A of up to treble the tax undercharged; and imprisonment for up to three years on indictment for wilful evasion.

Section 80P creates an exposure new to Hong Kong: personal criminal liability for the adviser. A service provider engaged under section 13 of Schedule 63 is personally liable for failing to cause the return or notification to be filed. For Hong Kong tax practices and outsourced compliance providers this changes the terms of engagement: the obligation becomes a public-law duty, not a contractual one.

The three penalty tracks are alternatives, not cumulative. Section 80O is a summary offence with a “reasonable excuse” defence. Section 82 is the wilful evasion offence. Section 82A is administrative additional tax in lieu of prosecution, available only where the person has not been prosecuted under sections 80 or 82 — so the Commissioner elects a route. The IRD notes that “The levels of penalties are comparable to those currently imposed under the penal provisions in relation to profits tax under Part 4 of the IRO.”

The anti-avoidance rule is a modified section 61A. The IRD: “Section 61A of the IRO (i.e. the sole or dominant purpose test) applies, with modifications, to the GloBE and HKMTT regimes as the general anti-avoidance rule (GAAR).” The Bill had proposed a broader “main purpose test”; at Committee Stage the Government dropped it in favour of the existing sole-or-dominant-purpose test, “to maintain consistency with the existing mechanism”. Two additional factors are inserted into section 61A for Part 4AA purposes: any change in top-up tax liability resulting from the transaction, and whether the result achieved is inconsistent with the outcomes provided for under the OECD Model Rules.

Record Retention and Assessment Time Limits

Part 4AA records must be kept for nine years after completion of the transactions to which they relate — longer than the seven years required by section 51C of Cap. 112 for ordinary business records.

The Bill proposed twelve years. The Government’s Committee Stage Amendment: “In the proposed Schedule 63, in section 17(1)(b), by deleting ‘12’ and substituting ‘9’”, described in the same paper as “shortening the proposed record-keeping period… from 12 years to 9 years after the completion of the transactions”. The press release on passage confirms the policy: “the proposed record-keeping period is shortened… to reduce the compliance burden.”

The assessment time limit is fixed at eight and twelve years. The Committee Stage Amendment introduces “A fixed time limit of 8 years in relation to non-evasion cases and 12 years in relation to evasion cases”, running from the end of the group’s fiscal year where that year ends on 31 March, and otherwise from 31 March in the following year.

The error-correction window is extended from six years to eight: the reference to six years in section 70A is to be read as eight, and the same change is made for refunds under section 79.

The source for the figure is the Government’s Committee Stage Amendment paper laid before the Legislative Council (LC Paper No. CB(3)567/2025(01)) together with the press release issued on passage — both Level 1 and both directly accessible. The amendments were moved and passed on 28 May 2025. The text of section 17 of Schedule 63 itself is not machine-extractable from the Gazette copy, but the legislative chain is complete.

Practical consequence: nine-year retention and an eight-year assessment window together mean that documentation for the first in-scope year, 2025, must remain available until at least 2034.

The 2026–2028 Deadline Calendar: Three Typical Fiscal Years

All deadlines run from the last day of the reporting fiscal year: six months for the notification, fifteen months for the return or eighteen in the group’s transition year, and payment one month after the later of the filing deadline and the date of the notice of assessment.

Event	Fiscal year ended 31 December 2025	Fiscal year ended 31 March 2026	Fiscal year ended 30 June 2026
First in-scope period	1 Jan 2025 – 31 Dec 2025	1 Apr 2025 – 31 Mar 2026	1 Jul 2025 – 30 Jun 2026
Preceding year	—	Year to 31 Mar 2025 out of scope	Year to 30 Jun 2025 out of scope
Top-up tax notifi­cation	30 June 2026	30 September 2026	31 December 2026
Return: group already in scope of GloBE in 2024 (15 months)	31 March 2027	30 June 2027	30 September 2027
Return: 2025 is the group’s transi­tion year (18 months)	30 June 2027	30 September 2027	31 December 2027
Payment of top-up tax	1 month after the later of the filing deadline and the notice of assess­ment	Same	Same
Objec­tion to the assess­ment	2 months from the date of the notice of assess­ment	Same	Same
Notifi­cation for the following year	30 June 2027	30 September 2027	31 December 2027
Profits tax return	Mandatory e-filing with iXBRL, year of assess­ment 2025/26	Same	Year of assess­ment 2026/27

Caveat: the 30 June column is computed from the statutory rules — no published calendar covering June year ends was found. The December and March dates match KPMG’s independently published calendar.

The most underestimated date in the regime is 30 June 2026. It fell five months and eleven days after the Portal opened on 19 January 2026 and required, in sequence: a paper Form IR1485 and its processing by the Department; registration of a Business Tax Portal business account with a Responsible Person; an e-Cert (Organisational) with AEOI Functions for every signer; and a group-level decision, recorded in the notification, on where in the world the GIR would be filed. That chain, rather than the arithmetic of the deadline, was the bottleneck of the first filing season.

Expected revenue is about HK$15 billion a year from the 2027-28 financial year. The figure was given in the 2024-25 Budget Speech (“It is estimated that these proposals will bring in tax revenue of about $15 billion for the Government annually starting from 2027-28”), repeated when the Bill was gazetted on 27 December 2024, again on passage on 28 May 2025, and again in the 2026-27 Budget Speech on 25 February 2026. It has not been revised in two years. The 2027-28 start reflects the compliance calendar rather than the economics: the first returns for 2025 fall due between March and June 2027, with payment a month later.

How many groups are actually in scope in Hong Kong has never been published. Neither the FSTB and IRD consultation paper, nor the LegCo Brief, nor any press release gives an estimate. The official statements are qualitative: “The vast majority of corporate taxpayers, including local small and medium enterprises, will not be affected.” The IRD has also published no statistics on notifications filed.

Step-by-Step: What an In-Scope Group Should Do Now

Step 1. Determine whether the group is in scope, using consolidated accounts for the four preceding years. The test is EUR 750 million or more in at least two of the four. Conversion into euros uses the European Central Bank reference rates.

Step 2. Identify the first in-scope period by the fiscal year’s start date, not its end date. A year that began before 1 January 2025 is out of scope even if it ended during 2025.

Step 3. List every Part 4AA entity in Hong Kong. This is not limited to subsidiaries: it includes stateless constituent entities created in Hong Kong, Hong Kong standalone joint ventures and Hong Kong members of JV groups.

Step 4. File the paper Form IR1485 and obtain the MNE code. Joint ventures additionally require a JV code. This precedes everything else and carries no published processing standard — allow time.

Step 5. Register a Business Tax Portal business account. Registration is carried out by a Responsible Person — a director, company secretary, partner, investment manager or another person within the prescribed list. Entities without a business registration number must obtain the Business Registration Number Equivalent from the IRD.

Step 6. Order an e-Cert (Organisational) with AEOI Functions from Hongkong Post for every signer. The forms are CPos 798F and the supplementary CPos 798FA. A personal certificate and an organisational certificate without AEOI Functions are both rejected by the Portal. A group already filing country-by-country reports in Hong Kong can reuse its existing certificate.

Step 7. Designate one Hong Kong entity to file for all — separately for the notification and for the return. The return designation must be renewed annually.

Step 8. Decide at group level where the GIR will be filed, before submitting the notification. The notification requires the route to be recorded: group filing in Hong Kong, group filing outside Hong Kong with the filing entity and its jurisdiction identified, or local filing. These details can only be changed afterwards by e-message through the business account.

Step 9. Check whether the group has already had a transition year. If the parent is in a jurisdiction that applied a qualified IIR from 2024, there will be no eighteen-month extension in Hong Kong — only fifteen months.

Step 10. Model the transitional CbCR safe harbour against the country-by-country reporting figures. For fiscal years beginning in 2025 the simplified ETR hurdle is 16%; for those beginning in 2026 it is 17%.

Step 11. Compute the blended Hong Kong effective rate across all entities together, not entity by entity. Assess separately how offshore claims, FSIE exemptions, the patent box, the enhanced R&D deduction and sector concessions move that rate.

Step 12. Model the SBIE realistically. For a holding or treasury structure with a small headcount and no owned tangible assets, the substance carve-out is close to nil.

Step 13. Rebuild the year-end close process for mandatory electronic filing. From year of assessment 2025/26 entities of in-scope groups file BIR 51 or BIR 52 electronically only, with iXBRL-tagged accounts and tax computation; the semi-electronic route is closed to them.

Step 14. Test the GIR XML file through the Portal early. A test upload is not treated as filing, and the encryption tool’s requirements — 4GB of memory and Java Standard Edition 21 — in practice mean involving IT.

Step 15. Set retention at nine years and plan around the eight-year assessment window. Documentation for 2025 must remain available until at least 2034.

Common Mistakes and What They Cost

Mistake 1. Assuming the regime applies to a fiscal year that ended in 2025. The trigger is the year’s start date. A year ended 31 March 2025 began on 1 April 2024 and is out of scope. The cost runs both ways: either the group files an unnecessary notification for a period the law does not reach, or — more expensively — it misses the first real period, believing it has already reported.

Mistake 2. Extending the eighteen-month deadline to the notification. The extension applies to the return only, and only in the group’s transition year. The notification deadline is six months, unconditionally. Cost: missing it triggers a level 3 fine plus a further fine of treble the top-up tax undercharged under section 80O, and exposure to additional tax of up to treble the tax under section 82A.

Mistake 3. Assuming everyone filing for 2025 gets eighteen months for the return. The extension attaches to the group’s transition year, not to the first year Hong Kong’s rules apply. Cost: a group with a European, British, Japanese or Korean parent that came within a qualified IIR in 2024 plans for 30 June 2027 when its actual deadline is 31 March 2027. The three-month difference is usually discovered too late.

Mistake 4. Starting with the Portal rather than with the paper Form IR1485. Without a group code no notification can be filed, and the form is submitted on paper with no published processing standard. Cost: a missed six-month deadline for a reason that money cannot accelerate.

Mistake 5. Ordering the wrong digital certificate. The Portal accepts only an e-Cert (Organisational) with AEOI Functions. Cost: a personal certificate and an ordinary organisational certificate are both rejected, and the whole Hongkong Post ordering cycle must be repeated — often for a signer located outside Hong Kong.

Mistake 6. Asking a tax representative to file without engaging them as a service provider. The Portal FAQ is explicit: “Tax representatives not engaged as service providers cannot file top-up tax notifications on behalf of clients.” Cost: a week before the deadline the group discovers that its adviser is legally unable to submit — able only to view and to object.

Mistake 7. Treating the simplified ETR test as 15%. For fiscal years beginning in 2025 the hurdle is 16%; in 2026 it is 17%. Cost: a group assuming that 16.5% profits tax clears the test automatically discovers that the transitional safe harbour does not apply, and faces a full GloBE computation without the data prepared.

Mistake 8. Computing the effective rate entity by entity rather than by jurisdiction. All Hong Kong entities of the group are blended into one calculation. Cost: risk is understated where one concessionary structure drags the whole sub-group down, and overstated where an isolated low-taxed company is in fact sheltered by the rest.

Mistake 9. Continuing to defend offshore claims as though nothing had changed. For an in-scope group a successful exemption leaves the profit as GloBE income with nil covered taxes. Cost: the expense of building and defending the position is out of proportion to the one and a half percentage points it delivers, and the position creates a second, parallel tax base.

Mistake 10. Assuming the HKMTT removes the need for further computation. A Committee Stage Amendment specifically added guidance on situations where the QDMTT safe harbour does not apply. Cost: paying Hong Kong top-up tax does not guarantee that top-up tax will not also be assessed elsewhere.

Mistake 11. Assuming the side-by-side package takes a US-parented group out of the HKMTT. The package switches off the IIR and the UTPR, not domestic top-up taxes. Cost: the group’s Hong Kong entities skip the notification and the return believing themselves exempt, and fall within section 80O.

Mistake 12. Planning to file the profits tax return on paper. From year of assessment 2025/26 entities of in-scope groups must file electronically with iXBRL, and the semi-electronic route is closed to them. Cost: rebuilding the year-end close and the tagging of accounts in the final weeks before the deadline, usually through the external auditor and at a rush rate.

Who This Reaches, Who It Does Not, and When Professional Review Is Needed

The regime reaches the Hong Kong entities of multinational groups with consolidated revenue of EUR 750 million or more — and only those. Within that category the burden falls unevenly: heaviest on groups with a substantial Hong Kong footprint that rely on offshore claims, FSIE exemptions, the patent box, the enhanced R&D deduction or sector concessions — that is, precisely on those who built the Hong Kong structure for a low effective rate.

The regime does not reach individuals, purely domestic groups, small and medium enterprises or excluded entities.That is stated expressly in the Government’s LegCo Brief. A Hong Kong company outside a multinational group of that size files neither notification nor top-up tax return and does not move to mandatory electronic filing on this ground — its obligations remain those described in Hong Kong Company Registration 2026.

A separate category: investment entities and insurance investment entities are outside the HKMTT to preserve their tax neutrality, but that carve-out does not automatically place them outside the GloBE rules.

Professional review is needed in six situations. First, where group revenue oscillates around EUR 750 million and the “two of four” test may bite unexpectedly. Second, where the parent is in a jurisdiction that applied a qualified IIR from 2024 and the transition year has already passed. Third, where the Hong Kong sub-group contains an entity on a concessionary regime — patent box, ship leasing or aircraft leasing. Fourth, where the group has historically claimed offshore status in Hong Kong. Fifth, where the parent is US-based and the group is considering the side-by-side safe harbour. Sixth, where the structure includes joint ventures or stateless entities, since that is where filing obligations are most often lost.

Two questions deserve separating, because they are conflated more often than any others. The top-up tax notification and return are one line of obligations; mandatory electronic filing of the profits tax return is a different one, introduced by the same Ordinance through Schedule 65 and section 51AAB. The second obligation arises for an entity of an in-scope group whether or not a single dollar of top-up tax is ever payable.

FAQ

What is the HKMTT in plain terms?

The HKMTT is Hong Kong’s domestic top-up tax, introduced by the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025. It lifts a multinational group’s effective tax burden in Hong Kong to 15% where it would otherwise be lower. The point of the design is that Hong Kong collects the top-up rather than a foreign jurisdiction: without a domestic tax, the same amount would be taken by the parent jurisdiction under the income inclusion rule.

From which year does the global minimum tax apply in Hong Kong?

To fiscal years beginning on or after 1 January 2025 — the wording of sections 26AE(6) and 26AE(8) of Cap. 112. The trigger is the start of the year, not its end. For a 31 March year-end group the first in-scope period is 1 April 2025 to 31 March 2026, not the year ended 31 March 2025.

What revenue brings a group into scope?

Annual consolidated revenue of at least EUR 750 million in at least two of the four fiscal years immediately preceding the current one. The threshold is measured on the ultimate parent entity’s consolidated accounts; for currency conversion the IRD points to the European Central Bank’s euro reference rates.

When is the Hong Kong top-up tax notification due?

Within six months after the last day of the reporting fiscal year. For a group with a calendar fiscal year ended 31 December 2025 that fell on 30 June 2026; for a year ended 31 March 2026 it is 30 September 2026. The eighteen-month extension does not apply to the notification in any circumstances.

When is the top-up tax return due?

No later than fifteen months after the last day of the reporting fiscal year, or eighteen months for the group’s transition year. The transition year is the first year the group came within the GloBE rules at all, not the first year Hong Kong’s own rules applied. A group whose parent jurisdiction applied a qualified IIR from 2024 gets only fifteen months in Hong Kong.

What is Form IR1485 and is it mandatory?

Form IR1485 — “Application for Group Code in respect of Multinational Enterprise Group, HK Standalone JV or JV Group” — is the application for a group code, and without the code no notification can be filed through the Portal. It is submitted on paper; joint ventures additionally need a JV code. There is no statutory deadline, but in practice it must be processed before the six-month notification deadline expires.

Which digital certificate is required for the Pillar Two Portal?

Only an e-Cert (Organisational) with AEOI Functions issued by the Hongkong Post Certification Authority. The IRD states it directly: “An e-Cert (Personal) cannot be used” and “An e-Cert (Organisational) without AEOI Functions is not accepted by the Pillar Two Portal.” A group already filing country-by-country reports in Hong Kong can reuse its existing certificate.

Can a tax adviser file the notification for a company?

Only if engaged as a service provider under section 13 of Schedule 63 and registered with a Tax Representative Portal business account. The Portal FAQ: “Tax representatives not engaged as service providers cannot file top-up tax notifications on behalf of clients” — such a representative may only view submissions and lodge objections. A service provider, meanwhile, carries personal criminal liability under section 80P of Cap. 112 for failing to cause the filing to be made.

Does the OECD side-by-side package remove Hong Kong top-up tax for US-parented groups?

No. The package released on 5 January 2026 deems IIR and UTPR top-up tax to zero for groups parented in a qualifying jurisdiction — currently only the United States — but it does not affect domestic top-up taxes. The HKMTT is one, so the Hong Kong entities of a US-parented group remain in scope and must file both the notification and the return.

Does an offshore profits claim still make sense under Pillar Two?

For an in-scope group, largely no. Exempt profit remains GloBE income of the Hong Kong jurisdiction with nil covered taxes, so the blended effective rate falls and the HKMTT takes the difference up to 15%. The economic value of a successful claim shrinks from 16.5% to one and a half percentage points. For groups outside the scope, the territorial principle works exactly as before.

Is electronic filing of the profits tax return required?

Yes, if the entity belongs to an in-scope group. The obligation applies from a year of assessment beginning on or after 1 April 2025, that is 2025/26, covers forms BIR 51 and BIR 52, requires iXBRL, and closes the semi-electronic route. Once it arises, it applies to every subsequent year.

What are the penalties for failing to file?

A fine at level 3 — HK$10,000 — plus a further fine of treble the top-up tax undercharged under section 80O of Cap. 112. Alternatively the Commissioner may assess additional tax under section 82A of up to treble the tax undercharged. For wilful evasion on indictment: a level 5 fine of HK$50,000, treble the tax and up to three years’ imprisonment. Separately, section 80O(7) imposes a level 4 fine of HK$25,000 for failing to comply with a court order made under section 80O(6) requiring the return or notification to be filed.

How long must records be kept?

Nine years after completion of the transactions to which they relate — against seven years under section 51C of Cap. 112 for ordinary business records. The Bill had proposed twelve years; the period was cut by a Government Committee Stage Amendment. The assessment time limit is eight years, or twelve in cases of fraud or wilful evasion.

Key Takeaways

The global minimum tax and the HKMTT apply to fiscal years beginning on or after 1 January 2025 — by start date, not end date.

The threshold is EUR 750 million of consolidated revenue in at least two of the four preceding fiscal years.

The UTPR is enacted but not in force: as at August 2026 no Gazette notice appointing its commencement date has been published.

The notification is due six months after the fiscal year end, unconditionally; the eighteen-month extension applies only to the return and only in the group’s transition year.

Form IR1485 is filed on paper and comes before everything else; without a group code the Portal cannot be used.

The Portal accepts only an e-Cert (Organisational) with AEOI Functions — neither a personal certificate nor an organisational certificate without AEOI Functions will work.

Phase 1 of the Portal opened on 19 January 2026 and takes notifications only; Phase 2, which will take returns, is stated for the fourth quarter of 2026.

The effective tax rate is computed for the jurisdiction as a whole: every Hong Kong entity of the group is blended into one calculation.

For Hong Kong’s first in-scope year the simplified ETR hurdle in the transitional CbCR safe harbour is 16%, not 15%; for 2026 it is 17%.

The side-by-side package does not switch off domestic top-up taxes: the Hong Kong entities of US-parented groups remain within the HKMTT.

As at August 2026 no section 26AG notice bringing the January 2026 OECD package into Hong Kong law has been found, and the IRD’s page does not mention it.

Entities of in-scope groups must file the profits tax return electronically with iXBRL from year of assessment 2025/26; the semi-electronic route is closed to them.

A level 3 fine of HK$10,000 is not a sanction for a group of this size; the sanctions are treble the tax undercharged and up to three years’ imprisonment for wilful evasion. A level 4 fine does exist in the regime, but it punishes non-compliance with a court order rather than the failure to file.

Records are kept for nine years; the assessment window is eight years, or twelve in evasion cases.

Summary 

Hong Kong implemented Pillar Two through the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 (Ord. No. 21 of 2025), passed by the Legislative Council on 28 May 2025, signed on 5 June and published in the Gazette on 6 June 2025; it added a new Part 4AA and Schedules 61 to 65 to the Inland Revenue Ordinance (Cap. 112). The regime applies to multinational groups with annual consolidated revenue of at least EUR 750 million in at least two of the four preceding fiscal years, for fiscal years beginning on or after 1 January 2025; the income inclusion rule and the Hong Kong minimum top-up tax are in force, while the undertaxed profits rule is enacted but has no appointed commencement date. The effective tax rate is computed by jurisdiction: top-up tax equals net GloBE income less the substance-based income exclusion, multiplied by the difference between 15% and the effective rate. The SBIE percentages for fiscal years beginning in 2025 are 9.6% of payroll and 7.6% of tangible assets, falling to 5% and 5% by 2033. The top-up tax notification is due six months after the fiscal year end and the return fifteen months after it, or eighteen months in the group’s transition year; payment falls one month after the later of the filing deadline and the notice of assessment, the objection period is two months, and there is no provisional top-up tax. Filing is possible only through the Pillar Two Portal, whose first phase opened on 19 January 2026 for notifications, with a second phase stated for the fourth quarter of 2026; access requires a paper Form IR1485 for a group code, a Business Tax Portal business account, and an e-Cert (Organisational) with AEOI Functions from Hongkong Post — a personal certificate is not accepted. For the 2025 calendar fiscal year the notification was due by 30 June 2026 and the return falls due on 31 March 2027, or 30 June 2027 in a transition year. Entities of in-scope groups must file their profits tax returns electronically with iXBRL tagging from year of assessment 2025/26. Hong Kong obtained transitional qualified status for its IIR, HKMTT and QDMTT Safe Harbour from 1 January 2025 and signed the GIR MCAA on 21 April 2026, permitting group GloBE filing outside Hong Kong. The simplified ETR hurdle in the transitional CbCR safe harbour is 16% for fiscal years beginning in 2025 and 17% for 2026. The OECD side-by-side package released on 5 January 2026 deems IIR and UTPR top-up tax to zero for US-parented groups but does not affect the HKMTT. Penalties: a level 3 fine of HK$10,000 plus treble the top-up tax undercharged under section 80O, a level 4 fine of HK$25,000 under section 80O(7) for non-compliance with a court order, additional tax of up to treble the tax under section 82A, and up to three years’ imprisonment for wilful evasion under section 82; a service provider carries personal liability under section 80P. Records are retained for nine years, with an eight-year assessment window rising to twelve in evasion cases. Expected government revenue is about HK$15 billion a year from 2027-28.

How UPPERSETUP Helps

Coming within Pillar Two changes the shape of compliance more than the size of the tax bill: two new filing calendars appear, a new portal with its own access chain, mandatory electronic filing of the main return, and nine-year record retention. UPPERSETUP helps establish scope from the consolidated accounts, build the access chain to the Pillar Two Portal — from Form IR1485 through to signers’ certificates — model the blended Hong Kong effective rate and the availability of safe harbours, and rebuild the year-end close for mandatory electronic filing with iXBRL tagging. An overview of services by jurisdiction is on the Hong Kong page. Adjacent structuring questions are covered in Hong Kong + UAE: Dual Structure for International Business 2026 and Transfer Pricing in Hong Kong 2026.

Sources

Primary legislation and Legislative Council papers

1.        Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 (Ord. No. 21 of 2025) — Gazette copy hosted by the IRD

2.        Legislative Council Brief on the Bill, File Ref. TsyB R2 00/800/1/0 (C), December 2024

3.        Government Committee Stage Amendments to the Bill, LC Paper No. CB(3)567/2025(01)

4.        FSTB and IRD consultation paper, “Global minimum tax and HKMTT”, December 2023

5.        The standard scale of fines under Schedule 8 to the Criminal Procedure Ordinance (Cap. 221) — Education Bureau paper reproducing the full scale

6.        Schedule 16 to the United Kingdom’s Finance (No. 2) Act 2023 — the transitional substance-based income exclusion table, identical to Article 9.2 of the OECD Model Rules

7.        United Kingdom Finance (No. 2) Act 2023, section 157 — core international shipping activities

8.        United Kingdom Finance (No. 2) Act 2023, section 158 — ancillary international shipping activities

9.        HM Revenue & Customs manual MTT45620 — the list of core international shipping activities

10.    HM Revenue & Customs manual MTT45630 — ancillary activities, including bareboat charters of up to three years

11.    HM Revenue & Customs manual MTT45635 — the 50% cap on the exclusion of ancillary income

Inland Revenue Department (IRD)

12.    Global minimum tax and Hong Kong minimum top-up tax for multinational enterprise groups — the main regime page

13.    Pillar Two Portal — frequently asked questions

14.    A Guide to Submit Top-up Tax Notification, edition 01/2026

15.    Pillar Two Portal — resources and user guides

16.    Accessing the Pillar Two Portal from the Business Tax Portal — user guide

17.    Accessing the Pillar Two Portal from the Tax Representative Portal — user guide

18.    Supplementary User Guide for Preparing GIR

19.    Form IR1485, “Application for Group Code in respect of Multinational Enterprise Group, HK Standalone JV or JV Group” — IRD forms index

20.    Business Tax Portal — overview

21.    Mandatory electronic filing of profits tax returns — worked examples

22.    Electronic filing of profits tax returns, iXBRL and the IRD Taxonomy Package

23.    IRD “What’s New”

24.    IRD press release on gazettal of the Bill, 27 December 2024

25.    Two-tiered profits tax rates — IRD guidance

26.    Patent box — IRD page

27.    The FSIE regime — IRD page

28.    Aircraft leasing tax regime — IRD page

29.    IRD notes to Supplementary Form S12 — the ship leasing concessionary rate, including 0%, under Schedule 8C

30.    DIPN 55 — enhanced deduction for research and development expenditure

31.    AEOI compliance penalties — levels 3 and 5 expressed in dollars

Government press releases and Budget documents

32.    Government welcomes passage of the Bill, 28 May 2025

33.    Legislative Council sitting of 28 May 2025 — agenda notice

34.    Gazettal of the Bill, 27 December 2024

35.    First Reading on 8 January 2025 — agenda notice

36.    Launch of the public consultation, 21 December 2023

37.    Budget Speech 2024-25, paragraph 238 — the HK$15 billion estimate from 2027-28

38.    Budget Speech 2026-27, paragraph 261 — the estimate confirmed, 25 February 2026

International organisations and information exchange

39.    OECD — international community agrees way forward on the global minimum tax package, December 2025 (OECD pages are script-rendered; title and meta description verified)

40.    OECD — “Understanding the Side-by-Side package” event, January 2026

41.    OECD — central record of legislation with transitional qualified status

42.    OECD — common understanding of implementing jurisdictions and further administrative guidance, May 2026

43.    OECD — automatic exchange of information relationships

44.    European Central Bank — euro foreign exchange reference rates

45.    Hong Kong Monetary Authority — Monthly Statistical Bulletin (the page is script-generated and serves no content without a browser)

46.    Inland Revenue Authority of Singapore — transitional substance-based income exclusion percentages

Certification and technical infrastructure

47.    Hongkong Post Certification Authority — application form for an e-Cert (Organisational) and the AEOI Functions supplementary form (CPos 798FA)

48.    Hongkong Post — e-Cert (Organisational): eligible applicants, validity period and fees

Commentary used for cross-checking (Level 2)

49.    PwC Hong Kong — International Tax News Flash on the side-by-side package, January 2026

50.    PwC Hong Kong — Tax Facts and Figures 2026/27

51.    PwC Hong Kong — analysis of the Bill, December 2024

52.    Holland & Knight — the OECD Pillar Two side-by-side safe harbor package, January 2026

53.    KPMG China — key Pillar Two compliance dates in Hong Kong in 2026 and beyond

54.    KPMG China — the IRD’s letters to in-scope MNE groups, October 2025

55.    KPMG China — Hong Kong moves forward with minimum tax implementation, May 2025

56.    EY — Hong Kong tax alert on passage of the Bill, 28 May 2025

57.    DLA Piper — BEPS Pillar Two legislation came into effect in Hong Kong

58.    Alvarez & Marsal — Hong Kong IRD alerts MNEs to Pillar Two top-up tax compliance, October 2025

59.    BDO — Hong Kong tax authorities issue Pillar Two compliance letters to MNE groups, late September 2025

60.    RSM Hong Kong — what the first notification filing season showed, 22 July 2026

Disclaimer

This material is provided for information purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before taking any decision you should obtain individual professional advice reflecting your specific circumstances, jurisdiction, company status and the current requirements of the relevant regulators.

Publication date: August 2026.