Hong Kong: Amendments to draft legislation implementing Pillar Two global minimum tax rules
Amendments to draft legislation based on feedback from stakeholders
The Hong Kong government proposed various amendments to the draft legislation (Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill 2024) implementing the Pillar Two global minimum tax rules originally published on December 27, 2024 (read TaxNewsFlash), in response to feedback from stakeholders.
Key amendments to the bill include:
- “Main purpose test” removed as the general anti-avoidance rule (GAAR) for Pillar Two purposes
- Definition of local accounting standard expanded to mean IFRS or accounting standards prescribed by the HKICPA
- Amendments relating to top-up tax administration/compliance and to rules relating to reimbursements for top-up taxes
- Amendments to rules relating to deduction/credit for foreign top-up taxes and interaction of such taxes with foreign-sourced income exemption (FSIE) regime
- Amendments related to the OECD’s Administrative Guidance issued in June 2024 and January 2025
The draft legislation will likely be enacted or regarded as substantially enacted for purposes of financial reporting in the second quarter of 2025, with the IIR and HKMTT applying retroactively to fiscal years beginning on or after January 1, 2025.
For more information, contact the Global Leader of KPMG Global Transfer Pricing Services:
Burcin Nee | bnee@kpmg.com