Company: FRHC
Filing Date: 2025-07-29
Form Type: ARS
Source: 0000924805-25-000027
Chunk: 88

Company: Freedom Holding Corp.
Filing Date: 2025-07-29
Form: ARS
Chunk 88
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 domestic legislation imposing a minimum top-up tax, thus preventing other jurisdictions from taxing the same income under IIR or UTPR mechanisms. The Global Anti-Base Erosion ("GloBE") rules are designed to be implemented consistently across jurisdictions as part of a common approach, fostering predictable outcomes for MNEs and mitigating the risks of double taxation or tax disputes. Moreover, the rules include administrative simplifications and transitional safe harbors to minimize the compliance burden for enterprises, especially during the initial years of implementation. Compliance with the Pillar Two rules involves determining GloBE Income by making specific adjustments to financial accounting income, calculating Adjusted Covered Taxes to reflect taxes genuinely paid or accrued on GloBE income, and performing jurisdictional ETR computations. A Substance-based Income Exclusion allows MNEs to deduct routine profits associated with tangible assets and payroll expenses, thereby reducing taxable excess profits. Given these comprehensive changes and their complexity, the OECD Inclusive Framework has provided detailed administrative guidance, transitional safe harbors, and penalty relief measures aimed at simplifying compliance during initial implementation. However, uncertainties and compliance burdens may still arise, especially during the initial implementation phases, leading to potential taxation risks, including double taxation, calculation complexities, and currency fluctuation impacts. While entities within our consolidated financial statements monitor these rules closely to manage compliance risk effectively, particularly given the detailed administrative guidance and transitional safe harbors introduced by the OECD to alleviate some initial compliance burdens, we still face the risk of non-compliance and the associated tax liability risk. Frequent tax law changes in regions where we conduct operations could adversely affect our business and the value of investments. We are subject to a broad range of taxes and other compulsory payments, including, but not limited to, income tax, VAT and social contributions. Tax laws have been in force for a short period relative to tax laws in more developed market economies, and the implementation of these tax laws is still unclear or inconsistent. The tax laws and regulations in our regions outside the U.S. are subject to frequent changes, varying and contradicting interpretations, and inconsistent and selective enforcement. Currently the Government of the Republic of Kazakhstan is developing new Tax Code which can significantly affect our business, financial condition, and results of operations. The Transfer Pricing Law of the Republic of Kazakhstan, dated July 5, 2008, provides for three-level transfer pricing documentation, including a country-by-country report ("CbCR"). Under the mandatory filing requirements or CbCR in Kazakhstan, if a corporation reaches the reporting threshold established for the group's consolidated revenue