Is your business prepared for Hong Kong’s digital tax revolution? As the city transforms its tax administration system to align with global standards, companies face new compliance requirements, digital filing mandates, and international reporting obligations. From the 15% global minimum tax to mandatory e-filing and iXBRL reporting, Hong Kong’s tax landscape is undergoing its most significant transformation in decades. This comprehensive guide will help you navigate these changes and ensure your business stays compliant in the digital age.

Hong Kong’s Global Minimum Tax Implementation

Hong Kong has formally implemented Pillar Two of the OECD’s BEPS 2.0 initiative, introducing a 15% global minimum tax for large multinational enterprises. This represents a fundamental shift in international taxation, designed to combat profit shifting and ensure large corporations pay their fair share of tax regardless of where they operate.

Legislative Framework and Effective Dates

On June 6, 2025, Hong Kong enacted the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025. The legislation includes two key components with retroactive effect:

Compliance Requirements and Deadlines

Affected MNE groups must adhere to strict filing deadlines through the new Pillar Two Portal, which is launching in phases from January 2026:

Mandatory E-Filing and Digital Reporting Requirements

Hong Kong is transitioning from paper-based to fully digital tax administration. The Inland Revenue Department has launched new digital portals and implemented mandatory e-filing requirements that will affect all businesses in phases.

Phased Implementation Timeline

New Tax Portal System (Launched July 2025)

The IRD launched three new digital portals in July 2025 to facilitate electronic tax filing and enhance taxpayer services:

• Individual Tax Portal: Electronic filing of Salaries Tax returns (BIR60), personal assessment applications, tax payment, and account management
• Business Tax Portal (BTP): Electronic filing of Profits Tax returns with iXBRL documents, submission of financial statements and tax computations, and business registration matters
• Tax Representative Portal (TRP): Services for tax professionals and authorized representatives with bulk filing capabilities for multiple clients

iXBRL Reporting Requirements

The introduction of inline eXtensible Business Reporting Language (iXBRL) represents a significant shift in how financial information is reported to the IRD. iXBRL allows financial statements to be both human-readable and machine-readable, enabling automated data processing and analysis.

The IRD provides free iXBRL data preparation tools and three taxonomies to help businesses comply:

• Full Hong Kong Financial Reporting Standards (HKFRS) taxonomy
• HKFRS taxonomy for private entities and SMEs
• Tax computation taxonomy

Automatic Exchange of Financial Information (AEOI) and CRS Reporting

Hong Kong’s commitment to international tax transparency is demonstrated through its implementation of the Common Reporting Standard (CRS), developed by the OECD as a framework for the Automatic Exchange of Financial Account Information.

2025 CRS Reporting Requirements

Financial Institution Obligations

Under the AEOI framework, Hong Kong financial institutions must:

1. Identify Reportable Accounts: Financial accounts held by tax residents of reportable jurisdictions
2. Apply Due Diligence Procedures: Establish and maintain compliant due diligence procedures
3. Collect Required Information: Gather and maintain information on account holders and financial account details
4. Submit Annual Returns: File AEOI returns with the IRD by May 31 each year

Country-by-Country Reporting (CbCR)

Hong Kong has implemented Country-by-Country Reporting as part of its commitment to the OECD BEPS Action 13 framework. The IRD serves as the competent authority overseeing CbCR compliance in Hong Kong.

Scope and Filing Requirements

CbCR requirements apply to multinational enterprise groups with consolidated annual revenue of at least HKD 6.8 billion (approximately EUR 750 million) in the preceding financial year and at least one entity or permanent establishment in Hong Kong.

Preparing for Digital Tax Compliance: Practical Steps

For Multinational Enterprises Subject to Global Minimum Tax

1. Assess Scope and Impact: Determine if your group meets the EUR 750 million revenue threshold and identify all Hong Kong constituent entities
2. Implement GloBE Calculation Systems: Develop or acquire software capable of performing complex GloBE calculations and establish data collection processes
3. Register for Pillar Two Portal: Monitor IRD announcements for portal registration (phased launch from January 2026)
4. Review Tax Planning Structures: Reassess holding company structures in light of the 15% minimum rate
5. Engage Professional Advisors: Consult with tax professionals experienced in GloBE rules and conduct mock calculations

For All Businesses Preparing for Mandatory E-Filing

1. Understand Your Timeline: Large corporations/MNEs must comply from 2025/26 assessment year; all businesses by 2030
2. Register for Appropriate Tax Portal: Business Tax Portal for corporate entities or Tax Representative Portal for tax professionals
3. Adopt iXBRL Reporting: Download IRD’s free iXBRL Data Preparation Tools and train accounting staff on tagging requirements
4. Update Accounting Systems: Ensure software can export data in iXBRL-compatible formats
5. Participate in Voluntary E-Filing: Gain early experience and benefit from automatic one-month filing extensions

For Financial Institutions (CRS/AEOI Compliance)

1. Review and Update Due Diligence Procedures: Ensure compliance with latest CRS guidance from IRD and OECD
2. Prepare for IRD Inspections: Maintain comprehensive documentation of CRS procedures and conduct internal audits
3. Enhance Data Management: Implement systems to track reportable accounts across all 120+ jurisdictions
4. Meet May 31 Deadline: Complete CRS report for calendar year 2024 and verify accuracy before submission

Strategic Implications for Hong Kong Businesses

Despite the implementation of the global minimum tax, Hong Kong remains committed to maintaining its status as a business-friendly, low-tax jurisdiction. Key competitive advantages include:

• Simple Tax System: No VAT/GST, capital gains tax, or withholding tax on dividends
• Territorial Tax Principle: Only Hong Kong-sourced income is taxable (subject to BEPS rules)
• Low Standard Rates: Profits tax at 16.5% for corporations (8.25% on first HK$2 million under two-tiered rates)
• Extensive Tax Treaty Network: Double taxation agreements with over 45 jurisdictions

Hong Kong’s digital tax transformation represents both a challenge and an opportunity for businesses. While compliance requirements are becoming more complex, the shift to digital systems offers significant benefits in efficiency, transparency, and strategic planning. By starting your preparation now, engaging professional advisors, and embracing digital tools, your business can not only meet these new requirements but also gain competitive advantages in Hong Kong’s evolving tax landscape.