First announced: Legislative approval for Pillar Two measures reported May 29, 2025; IRD guidance updated June 2025.
Submitted by: NYBACS Compliance Desk
Hong Kong moved to implement the OECD Pillar Two minimum tax and tightened transfer-pricing documentation in 2025.
Legislative approval and IRD guidance were issued in late May/June 2025.
Multinationals must refresh TP documentation and model potential top-up taxes.
What changed: Hong Kong progressed with legislative measures to implement the OECD Pillar Two global minimum tax (15% top-up tax for qualifying multinational groups) and updated associated transfer-pricing (TP) rules; the Legislative Council/official channels reported approval in late May 2025 with IRD guidance updates in June 2025. Hong Kong’s approach aligns domestic rules with the OECD’s GloBE model and includes expectations for robust TP documentation and top-up tax computations.
Who’s affected: Multinational enterprise groups with consolidated revenue ≥€750m and entities with significant Hong Kong operations involved in cross-border allocations.
Immediate actions
Carry out a Pillar Two scoping exercise (identify in-scope entities and compute provisional ETRs).
- Update Master File / Local File TP documentation and prepare a complete set of spreadsheet evidence for domestic audit queries.
- Assess whether a QDMTT or other domestic top-up approach will apply and provision in financials where needed.
Practical notes: Hong Kong intends to retain competitiveness but adopt the administrative mechanisms to collect top-up tax where appropriate — companies should centralise Pillar Two calculations, document assumptions, and engage local tax counsel for domestic filings.
