Pillar Two in Hong Kong: the 15% minimum tax and the 2026 to 2027 compliance calendar

Context

For two decades Hong Kong's corporate tax story was simple: a territorial system, a headline profits tax rate of 16.5%, and no tax on dividends or most capital gains. The OECD's Pillar Two rules add a new layer for the largest multinational groups. Under Pillar Two, groups with annual consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years should pay an effective tax rate of at least 15% in every jurisdiction where they operate.

Hong Kong chose to implement the regime rather than leave the top-up tax to other countries. The Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 was enacted on 6 June 2025. It introduces the global minimum tax, including the income inclusion rule and the undertaxed profits rule, together with a domestic Hong Kong minimum top-up tax, for fiscal years beginning on or after 1 January 2025.

What changed in 2026

The regime is now operational. The Inland Revenue Department (IRD) launched the first phase of its Pillar Two Portal on 19 January 2026, allowing in-scope entities to file top-up tax notifications electronically. According to KPMG's April 2026 compliance roadmap, the second phase of the portal, covering returns and assessments, is scheduled for the fourth quarter of 2026.

In late September 2025 the IRD wrote to entities it believed might belong to in-scope groups. That outreach was not a legal filing, and the IRD has been cross-checking replies against existing data such as country-by-country reports. Not receiving a letter does not mean a group is out of scope.

Groups must also get through several administrative steps before they can file anything: applying for an MNE group code using Form IR1485 (and separate joint venture codes where relevant), registering Business Tax Portal accounts for the entities that will file, appointing service providers inside the portal, and obtaining an organisational e-Cert with the functions needed for automatic exchange of information filings. None of these is difficult on its own, but they take time and involve several parties.

The compliance calendar

The key dates, as summarised in KPMG's roadmap, are:

• Top-up tax notification for FY2025: 30 June 2026 for December year-end groups; 30 September 2026 for March year-end groups. This is a scoping filing: it confirms the in-scope Hong Kong entities, names the filer and identifies where the GloBE information return will be filed. It does not require effective tax rate calculations.
• Top-up tax return for FY2025: 31 March 2027 for December year-end groups already in scope in 2024; 30 June 2027 for March year-end groups already in scope; 30 June 2027 and 30 September 2027 respectively for groups newly in scope in 2025, which benefit from an 18-month window.
• FY2026 notification: 30 June 2027 (December year-end) or 30 September 2027 (March year-end), with FY2026 returns due in 2028.

The top-up tax return combines two parts: a GloBE information return component and an HKMTT component. Where the GloBE information return is filed by the parent in another jurisdiction and exchanged with Hong Kong, local entities generally do not repeat that part, but they must still file the HKMTT section.

The safe harbour question

For many groups, the most important practical issue is whether they can rely on the transitional country-by-country reporting (CbCR) safe harbour. Following the OECD's side-by-side package, the transitional period has been extended by one year, so it can apply to fiscal years ending up to 31 December 2027 for December year-end groups.

The safe harbour tests (de minimis, simplified effective tax rate and routine profits) all use data from a qualified CbC report. A report only qualifies if it is prepared from qualifying financial statements. If a jurisdiction's figures come from management accounts or internal reporting rather than statutory or consolidation accounts, the safe harbour is unavailable for that jurisdiction, even if the underlying tax position is comfortable. This is why advisers keep saying that Pillar Two is a data project as much as a tax project.

Implications for investors, families and businesses

For multinational groups, the immediate task is operational: codes, portal access, e-Certs, a clear owner for each filing, and a reconciliation between the entity list used for the notification, the profits tax returns and the group's GloBE data.

For investors, Pillar Two changes how to read low effective tax rates. Incentives that reduce tax below 15% may now be topped up somewhere in the group. When assessing a company's earnings, it is worth asking how much of its tax planning remains effective under the new rules, and whether management has quantified any top-up exposure.

For family-owned groups, the EUR 750 million threshold is the first question. Many family businesses sit below it; some do not, particularly where holding structures consolidate operating companies across several countries. Families planning acquisitions should check whether a deal could push the group into scope.

For smaller companies, Pillar Two is mostly indirect. It may still matter if you supply or sell to large groups that are now reviewing transfer pricing and intra-group arrangements.

Questions to consider

• Have we confirmed, with documented reasoning, whether our group is in scope for each fiscal year?
• Do we have MNE and joint venture codes, portal accounts and e-Certs in place, and who is responsible for each?
• Is our CbC report built from qualifying financial statements in every jurisdiction?
• Which Hong Kong incentives or structures we rely on could produce an effective rate below 15%?
• Are the entity lists in our profits tax returns, notifications and group data consistent?

Closing

Hong Kong's Pillar Two regime is no longer a future event. The first notifications are due within weeks and the first returns within a year. Groups that treat 2026 as a dry run, testing data, systems and responsibilities, will find the 2027 filings far less stressful than those that wait for the forms to arrive.