Does Hong Kong's 15% global minimum tax (Pillar Two) affect my SME?

What it is. Pillar Two sets a 15% minimum effective tax rate on large multinational groups in each jurisdiction where they operate. Hong Kong enacted the law on 6 June 2025: the GloBE rules (an income inclusion rule (IIR) and an undertaxed profits rule) plus a Hong Kong minimum top-up tax (HKMTT) to collect any top-up tax on low-taxed Hong Kong entities itself.

Who is in scope. Only an in-scope MNE group: one with annual consolidated revenue of EUR 750 million or more in at least two of the four fiscal years immediately before the current year. If your group is below that, the rules do not apply to you at all.

When. The IIR and HKMTT apply for fiscal years beginning on or after 1 January 2025.

Administration. Part 4AA entities of in-scope groups must register for a group code, file top-up tax returns, and are required to e-file profits tax returns from 2025/26. The Inland Revenue Department (IRD) launched top-up tax return filing under the Pillar Two Portal on 26 October 2026.

For a typical SME: nothing to do for Pillar Two. Other rules, such as the foreign-sourced income exemption (FSIE) regime and transfer pricing, are separate and have their own tests. If your company is a subsidiary of a large foreign group, ask the group's tax team whether your entity is a constituent entity.