Foreign Tax Credits and the Pillar Two GloBE Rules
February 21, 2025
Foreign tax credits interact with the Pillar Two GloBE Rules in a number of ways. In this article we assess the key impact.
Global Minimum Tax
In Today’s 2023 Budget, Hong Kong’s Financial Secretary confirmed that Hong Kong will implement the Pillar Two Global Minimum Tax from 2025.
They estimate that it will generate tax revenue of $15 billion per year for the Government. A consultation is to be launched to allow MNE groups to make early preparation.
It was also announced that Hong Kong will be introducing a Patent Box.
Given the significant foreign direct investment (FDI) into Hong Kong (in 2021 FDI inflows into Hong Kong were US$140.7 billion, the 3rd highest globally behind the United States and Mainland China), it is expected that there will be other ancillary adjustments over the next 2 years to the domestic tax regime to ensure Hong Kong remains internationally competitive after the GloBE rules are introduced.
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Foreign tax credits interact with the Pillar Two GloBE Rules in a number of ways. In this article we assess the key impact.
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