BEPS Pillar Two – Key Compliance Timeline and How Boardroom Can Assist

Hong Kong has enacted legislation to implement BEPS Pillar Two (Global Minimum Tax) with effect from financial years beginning on or after 1 January 2025. Multinational enterprise (“MNE”) groups that meet the relevant revenue thresholds are subject to new notification, filing and administrative obligations in Hong Kong.

This article:

• provides an overview of key Pillar Two compliance milestones, including both the Top-up Tax Notification and the Top-up Tax Return;
• highlights common first-year compliance challenges; and
• explains how Boardroom can assist affected groups.

An illustrative timeline for a group with a 31 December 2025 financial year‑end is included for reference only. Groups with different financial year‑end dates should adjust the timeline accordingly by reference to their own year‑end.

This note is intended for general guidance only and should not be regarded as exhaustive or as a substitute for professional advice.

Pillar Two introduces a 15% global minimum effective tax rate for large MNE groups and establishes a new compliance framework, including annual notifications, returns and mandatory electronic filing requirements.

Key points to note:

• Pillar Two compliance is determined at the group level, not by reference to the size or profitability of individual Hong Kong entities.
• Compliance obligations (including both the Top-up Tax Notification and Top-up Tax Return) apply even where no Pillar Two top-up tax is ultimately payable.
• Registration and administrative readiness (e.g., Business Tax Portal (“BTP”) access, Pillar Two Group Code, and service provider appointments) are critical to meeting statutory deadlines.

Early preparation is therefore strongly recommended.

For a Hong Kong constituent entity of an in‑scope MNE group, Pillar Two compliance will typically involve:

1. Assessing Pillar Two in‑scope status at group level;
2. Registering for the BTP and applying for Pillar Two MNE Group Code / JV Code(s);
3. Filing an annual Top‑up Tax Notification within six months after the end of the relevant financial year;
4. Preparing and filing an annual Top-up Tax Return within the applicable filing deadline (15 months after year-end, or 18 months for the first transition year); and
5. Ongoing alignment with existing Hong Kong tax compliance obligations, including Profits Tax Returns (mandatory electronic filing from YA 2025/26), transfer pricing documentation, and Country-by-Country reporting.

Note: Each Hong Kong constituent entity that is designated to submit Pillar Two filings is required to register its own dedicated BTP Business Account. For designated filing entities, BTP registration is a mandatory prerequisite for submitting the Pillar Two Top‑up Tax Notification and Top‑up Tax Return, and for appointing a service provider to handle such filings. Unlike ordinary Profits Tax Returns, Pillar Two requires entity‑level BTP registration before a service provider can be properly authorised through the IRD’s Pillar Two Portal. Based on prevailing IRD administrative practice, a Hong Kong constituent entity that is relieved from filing its own Top‑up Tax Notification and Return may not be required to maintain an active BTP Business Account, unless it is subsequently designated as a filing entity or elects to register one for administrative convenience.

The timeline below illustrates how Pillar Two compliance may unfold for a group with a 31 December 2025 year‑end, which represents the first cohort of groups required to file a Top‑up Tax Notification in Hong Kong. Groups with other year‑ends should use this as a reference and apply the same principles based on their own financial year‑end.

Indicative Pillar Two timeline

Groups with financial year‑ends other than 31 December should note that:

• The Top‑up Tax Notification must be filed within six months after the end of the relevant financial year.
• The Top-up Tax Return must be filed within 15 months after the end of the relevant financial year (extended to 18 months for the first transition year of the group).
• Early planning is particularly important for the first year of application, irrespective of the accounting date. BTP registration and Group Code application should commence well ahead of the notification deadline

As with other new tax compliance regimes, first‑year implementation of Pillar Two often presents the following challenges:

• Late identification of in‑scope status, particularly for groups with overseas headquarters;
• Delays in BTP registration, service provider appointment, and Pillar Two Group Code application;
• Unclear internal ownership between group tax teams and Hong Kong finance teams;
• Data consistency issues across Pillar Two, transfer pricing and Country‑by‑Country reporting; and
• Underestimating the time required for first‑year registrations and internal approvals, even where no top‑up tax is expected.

Addressing these issues early can significantly reduce compliance risk and administrative burden.

Boardroom provides end‑to‑end Pillar Two compliance support tailored to Hong Kong entities and multinational groups, including:

Given the tight first‑year timelines, groups that may be affected by Pillar Two should consider:

• Confirming Pillar Two in‑scope status as early as possible;
• Identifying a Hong Kong point‑of‑contact and potential designated filing entity; and
• Initiating BTP registration and Pillar Two Group Code application well ahead of the notification deadline; and
• Engaging professional support for coordinated global and local compliance.

We encourage potentially affected groups to engage early, particularly in relation to first-year registration, portal readiness, notification, and return requirements.

As Pillar Two requirements come into effect, early preparation and the right support can make a meaningful difference. At BoardRoom, we work closely with clients to navigate each stage of the compliance process — from initial assessment and registration to filing and ongoing requirements. If you would like to understand how these changes may impact your group or explore how we can support your Pillar Two readiness, please get in touch with our team.