The Base Erosion and Profit Shifting (BEPS) project attempts to address weaknesses in an outdated international tax framework that create opportunities for BEPS, which refers to tax-avoidance practices and aggressive tax-planning schemes. While the BEPS 1.0 initiatives created notable changes in international tax rules, it did not comprehensively deal with the tax challenges created by the current digital business environment. To address this issue, the Organization for Economic Co-operation and Development (OECD) launched a new two-pillar solution – BEPS 2.0 – bringing dramatic changes to the global tax landscape.
Negotiations and consultations on BEPS 2.0 are ongoing, and significant progress has been made, particularly on Pillar Two compliance. As of April 2025, about 60 jurisdictions are in the final stage of legislation for Pillar Two, while five more are in the drafting stage, according to Deloitte Global Pillar Two Legislative Tracker.
Special thanks to Doris Chik, Tax Partner at Deloitte China, and a member of the Institute’s Taxation Faculty Executive Committee, who A Plus consulted as an expert for the two timelines in this feature.
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19 July 2013
The OECD, tasked by the G20, publishes the Action Plan on Base Erosion and Profit Shifting, identifying 15 actions to combat tax avoidance by multinational enterprises (MNEs).
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5 October 2015
The OECD and G20 release the final reports for the 15 BEPS 1.0 actions. The Action 1 final report on the digital economy acknowledges the need for further work due to the growing digitalization of the global economy, laying the groundwork for what would later become BEPS 2.0.
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30 June 2016
The OECD/G20 Inclusive Framework on BEPS is established, expanding participation beyond OECD and G20 countries. In the first 12 months, over 100 jurisdictions join to implement BEPS 1.0 measures and monitor progress.
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22 September 2017
The OECD reignites work on the digital economy, releasing a request for input on the tax challenges raised by the digital economy. The OECD’s Task Force on the Digital Economy begins exploring options.
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31 May 2019
BEPS 2.0 takes shape. The OECD releases Programme of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalization of the Economy, a document formally introducing the two-pillar approach.
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8 November 2019
The OECD introduces the Global Anti-Base Erosion (GloBE) proposal (Pillar Two), aiming to establish a global minimum tax rate. It would later be confirmed that the global minimum tax regime applies to large MNE groups with consolidated revenue of at least €750 million.
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14 October 2020
The OECD releases detailed blueprints for Pillar One and Pillar Two. While consensus is not fully achieved by the original deadline (end of 2020) due to complexities and the COVID-19 pandemic, these blueprints provide a technical foundation for further negotiations.
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8 October 2021
The Inclusive Framework finalizes the agreement, with 136 jurisdictions (out of 140) endorsing the two-pillar solution. The timeline shifts implementation to 2023-2024.
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20 December 2021
The OECD releases the Pillar Two Model Rules (GloBE rules), providing a framework for the 15% minimum tax, including the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR).
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20 December 2022
The Inclusive Framework releases an implementation package relating to Pillar Two, including guidance on safe harbours, simplifying compliance for MNEs and tax administrations.
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2023
Jurisdictions start drafting domestic legislation to enact Pillar Two rules. The OECD releases various administrative guidance on Pillar Two, refining technical aspects like transitional rules, safe harbours, Qualified Domestic Minimum Top-up Taxes, etc.
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11 October 2023
The OECD releases the Multilateral Convention to Implement Amount A of Pillar One, which coordinates a reallocation of taxing rights to market jurisdictions, improves tax certainty and removes digital service taxes.
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1 January 2024
Pillar Two rules become effective in several jurisdictions, including the EU, U.K., Japan, and South Korea, with the IIR applying to ensure minimum taxation. The UTPR is deferred to 2025 in many places.
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17 June 2024 & 15 January 2025
Further administrative guidance on Pillar Two is issued.
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13 January 2025
The OECD releases a statement describing the current status of Pillar One negotiations. Although consensus has not yet been reached, the work is continuing.
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20 January 2025
The U.S. government issues a memorandum announcing that the “OECD Global Tax Deal has no force or effect in the United States,” adding a new layer of uncertainty.
How is Hong Kong doing?
Since the launch of the OECD’s BEPS project, Hong Kong has been supportive of international efforts to enhance tax transparency and combat tax evasion.
For Hong Kong, as a global financial hub, striking a delicate balance between meeting international obligations and maintaining Hong Kong’s tax competitiveness by upholding its simple, certain and low tax regime has been a key focus all along the implementation process.
With the amendment bill seeking to implement BEPS 2.0 expected to be passed into Hong Kong law by mid-2025, in-scope MNE groups will be paying close attention to the new compliance requirements under the new GloBE rules and Hong Kong minimum top-up tax (HKMTT). Some may also be upgrading accounting and tax software to handle GloBE calculations and e-filing requirements.
This timeline reflects Hong Kong’s journey as part of the global effort to address BEPS.
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20 June 2016
Hong Kong joins the OECD/G20 Inclusive Framework as an Associate, and indicates to OECD its commitment to implementing the final package of 15 action plans to tackle BEPS.
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8 November 2019
The OECD introduces the GloBE proposal (Pillar Two), aiming to establish a global minimum tax rate. Hong Kong begins evaluating its implications as a low-tax jurisdiction.
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11 June 2020
The Hong Kong Financial Secretary establishes the Advisory Panel on BEPS 2.0, comprising scholars, tax experts, and business leaders to study the OECD’s proposals and recommend strategies for compliance.
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1 July 2021
Hong Kong joins over 130 jurisdictions in the Inclusive Framework, committing to implement BEPS 2.0, including the two-pillar solution.
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8 October 2021
The OECD announces the finalized agreement with Pillar Two setting a global minimum tax rate of 15% for MNEs with annual consolidated revenue above €750 million. The next day, the Hong Kong government issues a statement supporting the OECD’s announcement and confirms its intent to implement the BEPS 2.0 package.
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23 February 2022
The Financial Secretary announces in the 2022-23 Budget Speech that a legislative proposal would be submitted in 2022 to implement the global minimum tax rate in 2023 and a domestic minimum top-up tax would be considered to be introduced starting from the year of assessment 2024/25.
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22 February 2023
In the 2023-24 Budget Speech, the Financial Secretary announces that Hong Kong will implement the global minimum tax rate of 15% for in-scope MNEs starting from 2025, adjusting the earlier timeline from 2024 to align with international progress.
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21 December 2023
The Hong Kong government launches a three-month public consultation on implementing the GloBE rules and HKMTT, targeting fiscal years beginning on or after 1 January 2025.
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1 January 2024
Pending enactment of the legislation, a definition of “Hong Kong resident entity” is included in the Inland Revenue Ordinance to meet the requirements under the GloBE rules, and takes retrospective effect. This allows an entity that falls within the definition to be regarded as located in Hong Kong throughout the fiscal year 2024.
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30 October 2024
The Hong Kong government releases the consultation outcome, confirming the 2025 implementation timeline and that the implementation of the UTPR is postponed.
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27 December 2024
The Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill 2024 is gazetted, formalizing the GloBE rules (IIR) and HKMTT for 2025 and establishing a legal framework for UTPR.
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8 January 2025
The amendment bill is introduced into the Legislative Council for its first reading.
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Mid-2025
The bill is expected to pass, and GloBE rules (IIR) and HKMTT take effect for fiscal years beginning on or after 1 January 2025. The UTPR implementation date is to be specified later.
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30 June 2026
Deadline for a Hong Kong constituent entity of an in-scope MNE group (with a December year-end) to file a top-up tax notification, relating to its obligations of filing top-up tax return. The top-up tax notification notifies the Inland Revenue Department that an MNE group has come within the scope of the global minimum tax and HKMTT.
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August 2026
Mandatory e-filing of profits tax returns (year of assessment 2025/26) due for in-scope MNEs with December yearend, aligning with Pillar Two reporting requirements.
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31 March or 30 June 2027
First HKMTT and GloBE Information Return (GIR) returns due (for a Hong Kong constituent entity of an in-scope MNE group with a December year-end) in Hong Kong (15 months after the last day of the reporting fiscal year). The filing deadline for the first transition year of any constituent entities of an MNE group is extended to 18 months (end of June 2027).
