Caribbean Considerations: Strategic Tax Planning Under the OECD’s Global Tax Reforms

A New Chapter for the Caribbean in Global Taxation

The Caribbean has long been recognized as a vibrant hub for investment, offshore services, and tax-friendly jurisdictions. However, the OECD’s Two-Pillar Solution—especially Pillar Two’s Global Minimum Tax—is set to reshape how international businesses engage with the region.

As global norms shift toward transparency, consistency, and equitable profit distribution, Caribbean jurisdictions and multinational groups operating in or through the region must rethink their tax strategies. For stakeholders across finance, tourism, logistics, and digital services, this is not merely a compliance concern—it is a strategic pivot point.

Pillar One and Pillar Two: What They Mean for the Region

Pillar One: Reallocating Profits to Market Jurisdictions

• Primarily affects large multinational enterprises (MNEs) with global revenues above €20 billion and profits exceeding 10%.

• While few Caribbean-based MNEs may qualify, countries in the region could benefit from Pillar One by gaining new taxing rights over foreign companies generating substantial digital or service-based revenues from their residents.

Pillar Two: The 15% Global Minimum Tax

• Directly impacts the Caribbean’s traditional value proposition: low or zero effective corporate tax rates.

• Under the new regime, profits booked in low-tax jurisdictions will be subject to top-up tax in other countries, unless the Caribbean country adopts a Qualified Domestic Minimum Top-up Tax (QDMTT).

• This forces a reassessment of tax incentives, especially in jurisdictions that rely heavily on tax competition to attract investment.

Key Risks for Caribbean Jurisdictions

1. Loss of Tax Attractiveness for MNEs
   Tax incentives such as zero percent income tax, if no longer effective due to top-up taxes, may diminish the region’s appeal for holding companies, IP registries, and certain investment vehicles.

2. Revenue Shifting and Economic Substance Concerns
   MNEs may relocate certain operations or centralize activities in jurisdictions with more developed compliance infrastructures, especially if those jurisdictions adopt QDMTTs.

3. Pressure to Modernize and Comply
   To remain competitive and avoid reputational damage, Caribbean countries may face increased scrutiny from the OECD, EU, and other international bodies regarding tax transparency and BEPS compliance.

Opportunities for Forward-Thinking Caribbean Nations

Despite the risks, the reforms offer strategic opportunities for Caribbean governments and businesses:

• Implementing a QDMTT
  By introducing a domestic minimum tax aligned with OECD standards, Caribbean nations can retain taxing rights on profits that would otherwise be captured abroad.

• Transitioning from Tax Havens to Service Hubs
  Jurisdictions can shift focus to substance-driven strategies, such as offering skilled labor, fintech ecosystems, and business infrastructure to support regional headquarters and outsourcing centers.

• Innovating Incentive Structures
  Rather than headline tax rates, countries can compete through targeted incentives, such as:

  • Tax credits for R&D

  • Investment in digital infrastructure

  • Special economic zones tied to ESG or green technology

• Enhanced Compliance Services
  Caribbean-based firms—including Dawgen Global—can play a pivotal role in helping regional and foreign companies comply with the new international tax norms, creating new markets for professional services.

Dawgen Global’s Strategic Guidance in the Region

At Dawgen Global, we understand that the OECD’s Two-Pillar Solution presents both policy implications for Caribbean governments and operational challenges for multinational enterprises (MNEs). With deep regional roots and a forward-looking global perspective, we bring a comprehensive, multidisciplinary approach to navigating this new international tax landscape.

Our services are not limited to reactive compliance—we empower clients and jurisdictions to act strategically, proactively, and decisively.

Policy Advisory for Governments

Dawgen Global actively supports Caribbean governments in assessing and designing their response to Pillar Two reforms, including:

• Evaluating the feasibility and implementation of Qualified Domestic Minimum Top-up Taxes (QDMTTs) to retain taxing rights and mitigate external revenue leakage.

• Offering economic impact assessments to inform tax policy adjustments that maintain the region’s competitiveness while aligning with OECD standards.

• Capacity-building and training for tax authorities on GloBE rules, reporting frameworks, and dispute resolution mechanisms.

Strategic Restructuring for Multinationals

We work closely with MNEs to realign their structures in light of Pillar Two’s requirements:

• Reviewing investment holding structures, especially those anchored in low-tax jurisdictions, and recommending rationalizations or substance-enhancing alternatives.

• Advising on cross-border restructuring to optimize tax efficiency, avoid double taxation, and meet economic substance standards.

• Supporting clients through corporate governance and reporting modernization, ensuring readiness for audit scrutiny and regulatory reviews.

Technical Tax Modeling and GloBE Calculations

As GloBE rules require jurisdiction-by-jurisdiction tax computations, our specialists offer:

• Detailed GloBE income and covered tax calculations tailored to each business’s financial framework.

• Effective Tax Rate (ETR) modeling to identify jurisdictions at risk of triggering top-up taxes.

• Development of tax data dashboards and compliance checklists to streamline reporting and minimize errors.

Talent and Substance Strategy Development

In a world where substance over form is the new standard, Dawgen Global helps clients:

• Design regional operational models that align tax presence with real economic activity.

• Create and support talent acquisition and retention strategies to build skilled teams within jurisdictions.

• Partner with clients to ensure their Caribbean-based operations meet functional substance benchmarks, supporting the integrity of tax claims.

Legislative and Regulatory Advisory

We provide expert support to:

• Financial institutions and regulated entities adapting to shifting tax and regulatory requirements under Pillar Two.

• Draft and review legal frameworks, transfer pricing policies, and economic substance declarations to ensure regulatory alignment and investor confidence.

At Dawgen Global, we don’t just provide tax advice—we help Caribbean nations and enterprises leverage reform as a competitive advantage. With a focus on innovation, compliance, and sustainable growth, we help transform uncertainty into opportunity.

Conclusion: Time to Reimagine the Caribbean’s Role in Global Taxation

The OECD’s Two-Pillar Solution is more than a tax reform; it’s a paradigm shift that challenges long-standing assumptions about how tax competition, investment attraction, and fiscal sovereignty function in the Caribbean.

For years, many Caribbean jurisdictions relied on low or zero corporate tax regimes to attract business. But under Pillar Two, such strategies risk becoming obsolete or ineffective. Rather than viewing this as a setback, it should be seen as a catalyst for transformation.

Now is the time to redefine the Caribbean’s competitive value—not through tax rates alone, but through:

• Robust regulatory frameworks

• Digital infrastructure investments

• Innovation-driven economic policies

• Strategic regional partnerships

For governments, this is a pivotal moment to revisit tax policies, strengthen institutions, and align economic development with global standards.
For businesses, this is an opportunity to modernize operating models, embrace substance, and build sustainable tax strategies that meet the moment.

Dawgen Global stands at the intersection of regional expertise and global perspective. Our role is not only to help our clients comply—but to help them lead in this new era of international tax.

The future belongs to those who adapt. Together, we can make the Caribbean not just compliant, but competitive, credible, and globally respected.

Next Step!