Hong Kong IRD Alerts MNEs to Pillar Two Top-Up Tax Compliance
Background
The Hong Kong Inland Revenue Department (IRD) has begun contacting companies potentially affected by the Global Anti-Base Erosion (GloBE) Rules and the newly enacted Hong Kong Minimum Top-Up Tax (HKMTT).[1]These rules apply to multinational enterprise (MNE) groups with annual consolidated revenue of EUR 750 million or more in at least two of the four fiscal years immediately preceding the current fiscal year.
Key Developments
- Effective from 1 January 2025, Hong Kong entities may be subject to:
- Income Inclusion Rule (IIR) Top-Up Tax – For Hong Kong headquartered groups with an effective tax rate (ETR) in foreign jurisdictions below 15%
- HKMTT – For Hong entities of in-scope MNE groups where the group’s ETR in Hong Kong is below 15%
- Mandatory electronic filing of profits tax returns for in-scope MNE groups begins with the 2025/26 year of assessment.
- Entities must file top-up tax notifications and returns via the IRD’s new Pillar Two Portal, launching in phases from January 2026.
IRD Action Required
Companies receiving the IRD letter are asked to:
- Confirm whether they are in-scope for the GloBE Rules and HKMTT
- Apply for MNE and JV codes using Form IR1485
- Submit a list of Hong Kong entities required to e-file profits tax returns
- Respond to the IRD within the prescribed timeline
How A&M Can Help
A&M is supporting clients with:
- Scoping assessments to determine applicability of the GloBE Rules and HKMTT
- Filing support for IRD notifications, returns, and registration forms
- Training and readiness for electronic filing via the Business Tax Portal and Pillar Two Portal
- Liaising with IRD to clarify obligations and ensure timely compliance
If your group has received a letter from the IRD or may be in scope, we recommend engaging with your tax and finance teams promptly. A&M is available to assist with all aspects of the implementation and compliance process.
Contact Us
Please reach out to your A&M advisor to discuss how we can support your compliance with the new rules.
[1] Inland Revenue Department, “Hong Kong Minimum Top-Up Tax,” enacted June 6, 2025.
