As companies expand internationally, entity structuring becomes more than a compliance decision—it becomes a strategy for growth, risk mitigation, and global tax efficiency.
Under the OECD’s Pillar II framework, foreign affiliates earning less than a 15% effective tax rate may expose the parent company to top-up taxes. Improper structuring can lead to double taxation or tax inefficiency.
Common structuring missteps include:
- Using pass-through entities without foreign recognition
- Creating hybrid entities that trigger mismatches
- Holding IP in low-tax jurisdictions without economic substance
To avoid Pillar II pitfalls:
- Align legal structure with operational footprint
- Centralize ownership of intangible assets for defensibility
- Monitor global ETRs and local substance requirements
- Prepare country-by-country reports even if not yet required
Whether you’re expanding to Canada, Europe, or the Gulf region, each jurisdiction brings new tax rules. A strategic entity plan prevents headaches—and positions your business for sustainable international growth.
