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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The definition of CFC taxes that are restricted in the GloBE rules is much narrower than under many domestic CFC regimes. In this article we look at this issue.
The GloBE rules include a number of insurance specific adjustments. In this article we look at the nature of these provisions as well as the impact of the GloBE rules on insurance companies generally. Updated for OECD Administrative Guidance.
We have tracked the draft and enacted domestic laws issued to date back to both sets of OECD Administrative Guidance in this matrix for our members. This will be constantly updated as new or amended legislation is issued.
The requirements for a participation exemption under domestic law may not match the exemption requirements in the Pillar Two Rules. Read our analysis.
Taiwan’s Ministry of Finance confirmed today there is no set schedule for the introduction of the Pillar 2 GloBE rules in Taiwan. Taiwan’s Ministry of Finance has previously stated it will prepare draft legislation for the government to increase Taiwan’s domestic minimum tax rate from 12% to 15%.
However, this creates a number of issues in terms of its interaction with the Pillar Two global minimum tax.