Company: STGW
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000876883-25-000024
Chunk: 84

Company: Stagwell Inc
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 1
Chunk 84
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 and development, and interest deduction limitations. The Company is evaluating the impact of the OBBBA on its consolidated financial statements. We do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025.The OECD (Organisation for Economic Co-operation and Development) has proposed a global minimum tax of 15% of reported profits (Pillar 2) that has been agreed upon in principle by over 140 countries. Many countries have taken steps to incorporate Pillar 2 model rule concepts into their domestic laws. Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar 2. Accordingly, we have included an estimate of the impact of Pillar 2 in our estimated annual effective tax rate and continue to evaluate the potential consequences of Pillar 2 on our longer-term financial position.On June 28, 2025, The U.S. Treasury Department announced that an understanding of accepted principles had been reached with other members of the G-7 that would implement a “side-by-side” system that would fully exclude U.S. parented 

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groups from the Income Inclusion Rule (“IIR”) and Undertaxed Profits Rule (“UTPR”) in respect of both their domestic and foreign profits in recognition of the existing U.S. minimum tax rules to which such U.S. parented groups are subject.  If this understanding is implemented for some or all jurisdictions that have enacted Pillar 2 rules, we will update our estimate of the impact of Pillar 2 in our estimated annual effective tax rateAlthough it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, we do not expect any change to be material to our unaudited consolidated financial statements.Tax Receivables AgreementIn connection with the TRA, the Company is required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of OpCo’s assets resulting from exchanges of Paired Units (defined in Note 11) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to