Greenpro Capital Corp. Income Taxes Disclosure
NOTE 11 - INCOME TAXES
Loss before income taxes for the years ended December 31, 2025, and 2024 is summarized as follows:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Loss before income taxes: | ||||||||
| United States | $ | 719,938 | $ | 669,963 | ||||
| Foreign | 2,250,154 | 51,425 | ||||||
| $ | 2,970,092 | $ | 721,388 | |||||
Provision for income taxes for the years ended December 31, 2025, and 2024 is summarized as follows:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | 12,241 | 4,439 | ||||||
| Total current | 12,241 | 4,439 | ||||||
| Deferred: | ||||||||
| Federal | ||||||||
| State | ||||||||
| Foreign | ||||||||
| Total deferred | ||||||||
| Total provision for income taxes | $ | 12,241 | $ | 4,439 | ||||
The reconciliation of the federal statutory income tax amount and rate to the Company’s effective tax rate for the years ended December 31, 2025, and 2024 is as follows:
| Year ended December 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
| Loss before income taxes | $ | (2,970,092 | ) | $ | (721,388 | ) | ||||||||||
| Federal statutory tax rate | (623,719 | ) | 21.0 | % | (151,491 | ) | 21.0 | % | ||||||||
| State and local income tax, net of federal income tax effect | 151,187 | (5.1 | )% | 140,692 | (19.5 | )% | ||||||||||
| Foreign tax effects: | ||||||||||||||||
| China | ||||||||||||||||
| Changes in valuation allowances | 292,768 | (9.9 | )% | (225,583 | ) | 31.3 | % | |||||||||
| Foreign rate difference | (46,843 | ) | 1.6 | % | 36,093 | (5.0 | )% | |||||||||
| Other | % | 1,406 | (0.2 | )% | ||||||||||||
| Hong Kong | ||||||||||||||||
| Changes in valuation allowances | 97,712 | (3.3 | )% | 93,627 | (13.0 | )% | ||||||||||
| Foreign rate difference | 10,045 | (0.3 | )% | 25,535 | (3.5 | )% | ||||||||||
| Other | 12,241 | (0.4 | )% | 3,033 | (0.4 | )% | ||||||||||
| Malaysia | ||||||||||||||||
| Changes in valuation allowances | 48,042 | (1.6 | )% | 3,209 | (0.5 | )% | ||||||||||
| Foreign rate difference | (6,005 | ) | 0.2 | % | 160 | (0.0 | )% | |||||||||
| Labuan | ||||||||||||||||
| Changes in valuation allowances | 6,160 | (0.2 | )% | 5,582 | (0.8 | )% | ||||||||||
| Foreign rate difference | 36,958 | (1.3 | )% | 33,493 | (4.6 | )% | ||||||||||
| Other foreign jurisdictions* | 33,695 | (1.1 | )% | 38,683 | (5.4 | )% | ||||||||||
| Income tax expense and effective tax rate | $ | 12,241 | (0.4 | )% | $ | 4,439 | (0.6 | )% | ||||||||
| * | Other foreign jurisdictions include one of the Company’s subsidiaries incorporated in the British Virgin Islands (BVI) and Anguilla respectively with a zero corporate tax rate and two subsidiaries incorporated in Belize with tax exemptions due to foreign-sourced income and operating losses. |
The income taxes paid (net of refunds) by jurisdiction for the years ended December 31, 2025, and 2024, as reported in the Consolidated Statements of Cash Flows, are as follows:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| China | $ | $ | 1,692 | |||||
| Hong Kong | 11,371 | |||||||
| Total | $ | 11,371 | $ | 1,692 | ||||
The significant components of deferred taxes of the Company are as follows (rounded to the nearest thousand):
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets | ||||||||
| Impairment of goodwill, intangible assets, and investments | $ | 832,000 | $ | 832,000 | ||||
| Financing costs | 974,000 | 974,000 | ||||||
| Operating lease liability | 4,000 | 4,000 | ||||||
| Finance lease liability | 3,000 | 3,000 | ||||||
| Accounts receivable allowance | 1,000 | 1,000 | ||||||
| Net operating loss (NOL) carryforwards: | ||||||||
| – United States of America | 5,070,000 | 4,919,000 | ||||||
| – China | 626,000 | 334,000 | ||||||
| – Hong Kong | 690,000 | 632,000 | ||||||
| – Malaysia | 323,000 | 230,000 | ||||||
| – Labuan | 23,000 | 17,000 | ||||||
| Gross deferred tax assets | 8,546,000 | 7,946,000 | ||||||
| Less: Valuation allowance | (8,539,000 | ) | (7,938,000 | ) | ||||
| Total deferred tax assets | 7,000 | 8,000 | ||||||
| Deferred tax liabilities | ||||||||
| Operating lease right-of-use asset | 4,000 | 4,000 | ||||||
| Finance lease right-of-use asset | 3,000 | 4,000 | ||||||
| Total deferred tax liabilities | 7,000 | 8,000 | ||||||
| Net deferred tax asset (liability) | $ | $ | ||||||
The table below summarizes changes in the valuation allowance for deferred tax assets for the years presented (rounded to the nearest thousand):
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Valuation allowance | ||||||||
| Balance, beginning of year | $ | 7,938,000 | $ | 8,066,000 | ||||
| Increases in (reversal of) valuation allowance during the year | 601,000 | (128,000 | ) | |||||
| Balance, end of year | $ | 8,539,000 | $ | 7,938,000 | ||||
The Company believes that it is more likely than not that the deferred tax assets will not be fully realized in the future. Accordingly, the Company established a valuation allowance of $8,539,000 to offset deferred tax assets of $8,546,000 including deferred tax assets related to the net operating loss (NOL) carryforwards of $6,732,000 as of December 31, 2025.
For the year ended December 31, 2025, a valuation allowance was increased by $600,000, this increase was primarily due to an increase of NOL carryforwards of $292,000 from the Company’s China subsidiaries.
United States of America
The Company is registered in the State of Nevada and is subject to United States of America tax law.
For the years ended December 31, 2025, and 2024, the operations in the United States of America incurred a net operating loss (NOL) of $720,000 and $670,000, respectively.
As of December 31, 2025, the cumulative net operating losses (NOLs) were $24,143,000 which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2037, if unutilized.
China
The Company’s subsidiaries operating in China are subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of China with a unified statutory income tax rate of 25%.
For the years ended December 31, 2025, and 2024, the subsidiaries in China recorded an aggregate net operating loss (NOL) of $1,171,000 and an aggregate net operating income (NOI) of $902,000, respectively.
As of December 31, 2025, the subsidiaries operating in China had incurred the aggregate amount of cumulative net operating losses (NOLs) of $2,506,000 which can be carried forward to offset future taxable income. The NOL carryforwards will expire in 5 years, if unutilized.
Hong Kong
The Company’s subsidiaries operating in Hong Kong are subject to the Hong Kong Profits Tax at the statutory income tax rate of 16.5% on their assessable income for the tax year.
For the years ended December 31, 2025, and 2024, the subsidiaries in Hong Kong incurred an aggregate net operating loss (NOL) of $525,000 and $567,000, respectively.
As of December 31, 2025, the cumulative net operating losses (NOLs) aggregated for those subsidiaries which have operations in Hong Kong were $3,747,000. The cumulative NOLs can be carried forward indefinitely to offset future taxable income.
Malaysia
The Company’s subsidiaries operating in Malaysia are subject to the Malaysia Corporate Tax Laws at a standard income tax rate of 24% on their assessable income for the tax year.
For the years ended December 31, 2025, and 2024, the subsidiaries in Malaysia incurred an aggregate net operating loss (NOL) of $200,000 and $16,000, respectively.
As of December 31, 2025, the operations in Malaysia had incurred the aggregate amount of cumulative net operating losses (NOLs) of $1,348,000 which can be carried forward indefinitely to offset taxable income in the future.
Labuan
The Company’s subsidiaries operating in Labuan are subject to the Labuan Corporate Tax Laws at a progressive income tax rate starting from 3% on their assessable income for the tax year.
For the years ended December 31, 2025, and 2024, the subsidiaries in Labuan incurred an aggregate net operating loss (NOL) of $205,000 and $186,000, respectively.
As of December 31, 2025, the operations in Labuan have incurred the aggregate amount of cumulative net operating losses (NOLs) of $776,000 which can be carried forward indefinitely to offset taxable income in the future.
The Company has recorded a full valuation allowance against the deferred tax assets on the expected future tax benefits from the Company’s net operating loss carryforwards as the Company believes it is more likely than not that these deferred tax assets will not be fully realized in the future.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Apr 9, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 29, 2022 | |
| 2020 | Mar 29, 2021 | |
| 2019 | Mar 30, 2020 | |
| 2018 | Apr 2, 2019 | |
| 2017 | Apr 13, 2018 | |
| 2016 | Mar 27, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.