The space industry is one of the world’s most promising and rapidly growing sectors, offering numerous opportunities for economic development and scientific advancement. As the industry matures, policymakers might want to connect its potential to societal benefits by promoting its development or redistributing the related wealth. Against this background, fiscal policies in the form of taxes and tax incentives are critical tools at the policymakers’ disposal. The recent developments in the international tax framework could ‘dilute’ the attractiveness and effectiveness of tax incentives. This is due to the potential application of a top-up tax under the Global Anti- Base Erosion Model Rules and implementing domestic legislations. This article aims to clarify the role that the tax system and, more specifically, tax incentives can play in the space economy, and highlight the importance of assessing the potential impact of Pillar Two on tax incentives from which space companies benefit the most.