Illustrative Examples

Entity A is a Hong Kong constituent entity of MNE group X.  The accounting period with respect to which Entity A prepares its financial accounts and with respect to which its ultimate parent entity (“UPE”) prepares the consolidated financial statements are both made up to 31 December.  MNE group X is an in-scope MNE group for the fiscal year ended 31 December 2025.

Entity A would be mandated to e-file its profits tax return for the year of assessment 2025/26 and subsequent years of assessment.  This is because Entity A is a phase 1 applicable entity and MNE group X is an in-scope MNE group for the fiscal year corresponding the year of assessment 2025/26 (i.e. the fiscal year ended 31 December 2025).

Entity B is a joint venture of MNE group X that is located in Hong Kong.  The accounting period of Entity B is different from that of the UPE of MNE group X.  The financial accounts of Entity B are made up to 1 April while the consolidated financial statements of the UPE of MNE group X are made up to 31 December.  MNE group X is an in-scope MNE group for the fiscal year ended 31 December 2025.

Entity B would be mandated to e-file its profits tax return for the year of assessment 2025/26 and subsequent years of assessment.  This is because Entity B is a phase 1 applicable entity and MNE group X is an in-scope MNE group for the fiscal year corresponding to the year of assessment 2025/26 (i.e. the fiscal year ended 31 December 2025).

Entity C is a non-material constituent entity of MNE group X that is located in Hong Kong.  The accounting period of Entity C is different from that of its UPE.  The financial accounts of Entity C are made up to 31 March while the consolidated financial statements of its UPE are made up to 31 December.  MNE group X is an in-scope MNE group for the fiscal year ended 31 December 2025.

Entity C would not be required to e-file its profits tax return for the year of assessment 2024/25 because the first phase of mandatory e-filing requirement applies to a profits tax return for the year of assessment 2025/26 or after.  If Entity C remains a non-material constituent entity of MNE group X, it would be required to e-file its profits tax return for the year of assessment 2025/26 and subsequent years of assessment.

The facts are the same as Example 3.  MNE group X is no longer an in-scope MNE group for the fiscal year ended 31 December 2026.

Entity C would be mandated to e-file its profits tax return for the year of assessment 2025/26 and subsequent years of assessment.  This is because Entity C is a phase 1 applicable entity for the fiscal year corresponding to the year of assessment 2025/26 (i.e. the fiscal year ended 31 December 2026) (corresponding fiscal year) while MNE group X was an in-scope MNE group for the fiscal year that is preceding to the corresponding fiscal year (i.e. the fiscal year ended 31 December 2025).

The facts are the same as Examples 3 and 4.  During the fiscal year ended 31 December 2026, Entity D is acquired by the UPE of MNE group X and becomes a Hong Kong constituent entity of MNE group X.  The accounting period with respect to which Entity D prepares its financial accounts and with respect to which its UPE prepares the consolidated financial statements are the same.

Entity D would be mandated to e-file its profits tax return for the year of assessment 2026/27 and subsequent years of assessment.  This is because Entity D is a phase 1 applicable entity for the fiscal year corresponding to the year of assessment 2026/27 (i.e. the fiscal year ended 31 December 2026) (corresponding fiscal year) while MNE group X was an in-scope MNE group for the fiscal year that is preceding to the corresponding fiscal year (i.e. the fiscal year ended 31 December 2025).