Hot | Hong Kong Announces: Proposed 15% Global Minimum Tax Rate

The Hong Kong Government launched a consultation on December 21st on theImplementation details of the global minimum taxGathering of opinions, this information collection ends on March 20, 2024, and legislative proposals are expected to be submitted to the Legislative Council in the second half of 2024.

The proposal, once adopted, will be implemented from 2025 onwards for members of multinational enterprise groups that meet certain conditionsThe lowest 15% tax rate in the world.

Implementation of the BEPS 2.0 program

Covered Multinational Enterprises Minimum Tax Rate 15%

The Organization for Economic Cooperation and Development, in response to the risk of base erosion and profit shifting associated with the digital economy, has developed theInternational Tax Reform Program (BEPS 2.0)Pillar IIThe lowest tax rate in the world under the

Mr. Rafael Hui, Secretary for Financial Services and the Treasury, said, "As an international financial center and a responsible member of the international community, Hong Kong has always been very supportive of international efforts to enhance tax transparency and combat tax evasion. In order to fulfill our responsibility for international tax cooperation and to safeguard Hong Kong's taxing rights, Hong Kong will, in accordance with international consensuscarry out activelyPillar II in BEPS 2.0."

The HKSAR Government launched a consultation on December 21 on the implementation details of the Global Minimum Tax (GMT).Gathering of opinions.
 The Hong Kong government is proposing to implement the world's lowest tax rate, 15% conditions for:

🔸 Only for members of multinational enterprise groups that meet certain conditions (Global annual consolidated revenues of 750 million euros and above).

*Note: If the effective tax rate of a multinational enterprise group in Hong Kong is less than 15%, its relevant tax jurisdiction has the right to impose a top-up tax on the multinational enterprise entity.

🔸 Businesses with annual consolidated revenues of less than €750 million globally, as well as local SMEs, will not be affected.

Measures to facilitate business are also proposed

Reducing the compliance burden

Hong Kong amends the Inland Revenue Ordinance (IRO) (Cap. 112) to implement the lowest global tax rate and the Hong Kong minimum complementary tax. In formulating the legislative proposals, the Government is committed to maintaining Hong Kong's tax competitiveness by maintaining a simple, clear and low tax regime. It also proposes toBusiness facilitation measuresAmong them. Among them are:

The design of Hong Kong's minimum complementary tax, including the coverage and rates, will be in line with the design of the global minimum tax to ensure simplicity of the tax system;

Flexibility is provided by allowing covered multinational enterprise groups to decide how to apportion the Hong Kong minimum complementary tax payable among their Hong Kong entities;

Provide safe harbor provisions under the framework to reduce compliance burdens and enhance tax clarity;

Covered multinational enterprise groups are only required to file a single top-up tax return for both GST and Hong Kong Minimum Back Tax (HMWBT) to minimize the compliance burden.

In summary, the implementation of the global minimum tax rate reduces the scope for tax jurisdictions to use, for example, no tax or extraordinarily low preferential tax rates as a means of enhancing tax competitiveness in the future, and creates an environment in which jurisdictions are taxA more level playing fieldThe