HONG KONG -- The government of the Hong Kong Special Administrative Region on Saturday welcomed the Organization for Economic Cooperation and Development (OECD)'s announcement of the framework for international tax reform on base erosion and profit shifting (BEPS).

"As an international financial and commercial center, Hong Kong will actively participate in and implement this BEPS 2.0 package," a government spokesperson said.

The BEPS 2.0 package consists of two pillars. The first pillar targets large multinational enterprise (MNE) groups with global turnover above 20 billion euros ($23.14 billion) and profitability above 10 percent, and distributes the taxing rights in respect of a certain portion of the residual profit of these enterprises to the market jurisdictions.

The second pillar is the implementation of the global minimum effective tax rate, which targets large MNE groups with global turnover above 750 million euros ($867.77 million). If the effective tax rate of an MNE group in a jurisdiction is below 15 percent, its parent or subsidiary companies will be required to pay top-up tax in respect of the shortfall in the jurisdictions where they are located.

"The BEPS 2.0 package targets primarily large MNE groups that meet the above-mentioned specified conditions, and will not affect small and medium-sized enterprises in Hong Kong," the spokesperson said.

Paul Chan, financial secretary of the HKSAR government, appointed in June last year the Advisory Panel on BEPS 2.0, which comprises scholars, experts and members of the business community who are experienced in the fields of international taxation and economic development, to follow up on and study the OECD's discussions on the BEPS 2.0 international tax reform.

The spokesperson said the government will carefully study the recommendations of the Advisory Panel on BEPS 2.0 and, in consultation with stakeholders, undertake the domestic legislative exercise to implement the tax measures under BEPS 2.0 based on the BEPS 2.0 model rules to be finalized by the OECD.

The OECD aims at completing the drafting of the BEPS 2.0 model rules by the end of this year to early next year to enable participating jurisdictions to roll out their domestic legislative exercises in 2022 and implement the package from 2023.