Hong Kong’s government announced plans to introduce two global minimum tax rules, with a third rule to follow later. The Minimum Tax for Multinational Enterprise Groups Bill 2024 will bring in the qualified domestic minimum top-up tax (QDMTT) and income inclusion rule starting January 1, 2025. The QDMTT, known as the Hong Kong top-up tax, ensures local companies pay at least 15% tax. The income inclusion rule allows a company’s headquarters to add extra tax on subsidiaries taxed below 15%.
These rules are part of the OECD’s global deal, which includes Pillar One (profit reallocation to customer locations) and Pillar Two (a 15% minimum tax). Another rule, the undertaxed profits rule, will be added later. The bill is expected to raise HKD15 billion annually by 2027-28 and will be read in the Legislative Council on January 8, 2025.