As the global minimum tax moves from legislative design to operational reality, Hong Kong is positioning itself at the forefront of implementation – balancing robust compliance infrastructure with a commitment to keeping its tax regime competitive.
That was the overarching message at the ACCA Hong Kong Virtual Tax Conference 2026, held in March, where policymakers, regulators and practitioners convened to examine global tax developments, Hong Kong’s policy response and the practical challenges multinational enterprises face as Pillar Two beds in.
Cooperation milestone
Setting the international context in her keynote speech, Manal Corwin, director of the OECD’s Centre for Tax Policy and Administration, highlighted the significance of the side-by-side agreement reached in January among the now 148 members of the Inclusive Framework.
She traced the pressures that brought negotiators back to the table – expiring transitional provisions, the activation of the undertaxed profits rule, mounting complexity concerns and geopolitical headwinds from the new US administration.
‘It was really critical to achieve a negotiated solution, both to secure certainty and stability in the international system and to preserve the policy gains to which all countries in the Inclusive Framework were committed,’ Corwin said.
‘The upcoming period is more about reporting’
The resulting package introduced the simplified effective tax rate (ETR) safe harbour, extended the transitional country-by-country reporting safe harbour through 2027, aligned the treatment of substance-based tax incentives with economic activity, and reinforced the primacy of qualified domestic minimum top-up taxes for all in-scope multinationals.
According to Corwin, the agreement embeds a commitment to further simplification – and, more broadly, amounts to ‘a recommitment to international cooperation and competitiveness, particularly in this changing geopolitical environment’.
Policy response
‘The minimum top-up tax has been in effect since the start of 2025. The upcoming period is more about reporting,’ said Wilson Cheng FCCA, chairman of ACCA Hong Kong and partner, tax leader, Hong Kong and Macau at EY.
In a fireside chat moderated by Cheng, Inland Revenue commissioner Benjamin Chan JP outlined how Hong Kong SAR is translating global frameworks into local infrastructure.
Chan confirmed that the Pillar Two Portal, launched in January, is built as an extension of the existing Business Tax Portal. ‘The Pillar Two Portal allows multinational enterprise (MNE) groups subject to the Global Anti-Base Erosion (GloBE) Rules to file top-up tax notifications and top-up tax returns electronically,’ he said. This is part of a mechanism intended to lower the onboarding barrier for MNE groups filing in Hong Kong for the first time.
Turning to the Side-by-Side (SbS) Package, Chan offered a measured assessment. ‘The SbS safe harbour and ultimate parent entity safe harbour aren’t particularly relevant to Hong Kong. The ones most relevant to us are the simplified ETR safe harbour and the substance-based tax incentive safe harbour,’ he explained.
‘The best practice is to have a standard operating procedure in place’
On the competitive front, Chan noted that Hong Kong’s income-based tax incentives have the potential to become more effective under the new OECD rules. Yet he cautioned that jurisdictional interplay remains delicate: ‘To ensure that their minimum tax regimes obtain qualified status under the peer review process, jurisdictions need to be careful not to provide in-scope MNE groups with benefits related to the GloBE Rules. We’ve been discussing with the OECD how best to design our framework around that.’
From policy to practice
The conference’s panel discussion on Pillar Two trends and challenges, also moderated by Cheng, brought the conversation into the domain of day-to-day implementation.
Ivan Lam, partner, international tax and transaction services, Hong Kong at EY, reported that while most in-scope groups completed impact assessments well before the rules took effect, the compliance phase is raising the bar. ‘A lot of them are scrambling to gather the information they need. Data quality is a major consideration – many are investing in data analysis and automation to get on top of it,’ Lam said.
He urged practitioners to recognise that data for Pillar Two purposes flows from functions far beyond the tax team. ‘Data comes from different teams – HR, operations, tax, finance and more. Those teams need to understand what type of data we need from them. That initial briefing is really important,’ Lam noted.
Standardisation is the next priority. ‘Pillar Two spans many entities and jurisdictions, so the best practice is to have a standard operating procedure in place. Ultimately, companies will want to find a system or enterprise resource planning (ERP) solution to automate the data collection process,’ said Lam.
‘We need to design a system where everyone is clear about their duties’
Karen Koh, finance director, group tax, at Jebsen Group, provided a corporate perspective that echoed those realities. She stressed the importance of early and sustained engagement with senior leadership. ‘From the very beginning, we’ve been briefing our C-suite executives on what Pillar Two actually entails. They understand it’s a colossal task,’ Koh said.
The compliance duty, she noted, extends well beyond tax departments: ‘We need to get across the message that inter-group coordination and IT support are just as important.’ Designing clear accountability structures is essential. ‘It’s relevant at the group level, the sub-group level and the entity level,’ she said. ‘Who’s responsible for that number? How accurate is it? To orchestrate the whole thing, we need to design a system where everyone is clear about their duties.’
Cheng offered a timely reminder to practitioners managing this implementation: ‘You can’t just rely on the same traditional accounting standards for this, because Pillar Two has its own set of model rules and interpretations.’
More information
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