Company: FRHC
Filing Date: 2025-07-29
Form Type: ARS
Source: 0000924805-25-000027
Chunk: 87

Company: Freedom Holding Corp.
Filing Date: 2025-07-29
Form: ARS
Chunk 87
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 institutions and automatically exchange that information with other jurisdictions on an annual basis. The foregoing developments regarding global information exchange could complicate our tax planning as well as related business decisions and could possibly expose us to significant fines and penalties and to enforcement measures, despite our best efforts at compliance, and could result in a greater than expected tax burden. On November 24, 2016, the OECD published the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the "MLI") which introduces new provisions to existing double tax treaties limiting the use of tax benefits provided thereby. As a minimum standard, the MLI implements a principal purposes test, under which treaty benefits are disallowed if one of the principal purposes of the transaction or the structure was to obtain a tax benefit. The MLI was ratified by Cyprus on January 22, 2020, by Kazakhstan on February 20, 2020 and by Armenia on September 25, 2023. Application of the MLI could potentially limit tax benefits granted under the double tax treaties of Cyprus, Kazakhstan and Armenia. OECD's Inclusive Framework's agreement on Pillar-Two solutions impacts our business. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting ("BEPS") addresses the tax challenges arising from the digitalization and globalization of the economy. In October 2021, the OECD's Inclusive Framework ("IF") reached an agreement on a Two-Pillar Solution addressing global tax challenges. This framework, agreed upon by over 135 Table of Contents 52

jurisdictions, significantly reforms international tax rules to ensure multinational enterprises ("MNEs") pay a fair minimum level of tax in each jurisdiction where they operate. Pillar 2 specifically targets MNEs with annual consolidated revenues of EUR 750 million or more (for any two years within the last 4 reporting years), aiming to ensure a minimum global effective tax rate ("ETR") of 15%. The primary mechanisms under Pillar Two include: • Income Inclusion Rule ("IIR"): Applies at the level of the parent entity, imposing additional top-up taxes on the profits of constituent entities in jurisdictions with an ETR below the minimum threshold of 15%. • Undertaxed Profits Rule ("UTPR"): Serves as a secondary or backstop rule to the IIR, applying a residual top-up tax on constituent entities where such top-up tax is not adequately captured by the IIR. • Qualified Domestic Minimum Top-up Tax ("QDMTT"): Permits jurisdictions to implement