ADDENTAX GROUP CORP. Income Taxes Disclosure

14. TAXATION

 

(a)	Enterprise Income Tax (“EIT”)

 

The Company operates in the PRC and files tax returns in the PRC jurisdictions.

 

Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, is not subject to income taxes.

 

Yingxi HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive rate of 16.5%. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2025 and 2024.

 

 

YX were incorporated in the PRC and is subject to an EIT tax rate of 25%. No provision for income taxes in the PRC has been made as YX had no taxable income for the years ended March 31, 2025 and 2024.

 

All Yingxi’s operating companies were governed by the Income Tax Laws of the PRC and subject to progressive EIT rates from 5% to 15% in 2025 and 2024. The preferential tax rate will be expired at end of year 2025 and the EIT rate will be 25% from year 2025. Income taxes of the PRC companies were $4,649 and $11,605 for the year ended March 31, 2025 and 2024, respectively.

 

The Company’s parent entity, Addentax Group Corp. is a U.S entity and is subject to the United States federal income tax. No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the years ended March 31, 2025 and 2024.

 

The reconciliation of income taxes computed at the PRC federal statutory tax rate applicable to the PRC, to income tax expenses are as follows:

 SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

		2025				2024
PRC statutory tax rate			25	%			25	%
Computed expected (expenses) benefits		$	(1,189,972	)		$	(774,454	)
Temporary differences			101,036				74,805
Permanent difference			43,506				34,726
Changes in valuation allowance			1,050,079				676,528
Reported income tax expense		$	4,649			$	11,605

 

As of March 31, 2025, the accumulated tax losses in China amounting to $2.5 million (2024: $2.3 million) will expire in five years. As of March 31, 2025, the accumulated net operating loss carried forward in the US entity was $10.5 million (2024: $6.9 million).

 

Deferred tax assets had not been recognized in respect of any potential tax benefit that may be derived from non-capital loss carry forward and property and equipment due to past negative evidence of previous cumulative net losses and uncertainty upon restructuring. The management will continue to assess at each reporting period to determine the realizability of deferred tax assets.

 

(b)	Value Added Tax (“VAT”)

 

In accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 13%, which is levied on the invoiced value of sales and is payable by the purchaser. The subsidiaries HSW, AOT and YS enjoyed preferential VAT rate of 13%. Companies are required to remit the VAT they collect to the tax authority. A credit is available whereby VAT paid on purchases can be used to offset the VAT due on sales.

 

For services, the applicable VAT rate is 9% under the relevant tax category for logistic company, except the branch of PF enjoyed the preferential VAT rate of 3% in 2025 and 2024. The Company is required to pay the full amount of VAT calculated at the applicable VAT rate of the invoiced value of sales as required. A credit is available whereby VAT paid on gasoline and toll charges can be used to offset the VAT due on service income.