HWH International Inc. Income Taxes Disclosure
NOTE 12 — INCOME TAXES
The provision for income taxes consisted of the following:
| 2025 | 2024 | |||||||
| Current | $ | (47,472 | ) | $ | ||||
| Deferred | ||||||||
| Total | $ | (47,472 | ) | $ |
| 2025 | 2024 | |||||||
| Income taxes at statutory rate | 17.84 |
% | 20.39 | % | ||||
| Change in valuation allowance | (17.84 | )% | (20.39 | )% | ||||
| Other | % | % | ||||||
| Effective tax rate | % | % | ||||||
Significant components of the Company’s deferred tax assets and liabilities are as follows:
| 2025 | 2024 | |||||||
| Deferred tax assets: | ||||||||
| Receivable from related party | $ | $ | 897 | |||||
| Inventory | 5,800 | |||||||
| Lease Liability | 12,278 | 108,318 | ||||||
| Accrued Commission | 11 | |||||||
| Net Operation Loss | 886,022 | 777,572 | ||||||
| Total deferred tax assets | $ | 898,300 | $ | 892,598 | ||||
| Deferred tax liabilities: | ||||||||
| Prepaid commissions | $ | $ | ||||||
| Right-of-Use Assets | (11,889 | ) | (105,754 | ) | ||||
| Total deferred tax liabilities | $ | (11,889 | ) | $ | (105,754 | ) | ||
| Deferred tax assets / (liabilities), net | $ | 886,411 | $ | 786,844 | ||||
| Less valuation allowance | (886,411 | ) | (786,844 | ) | ||||
| Deferred tax asset c/f | $ | $ | ||||||
After consideration of all the evidence, both positive and negative, management has recognized a valuation allowance with respect to its net deferred tax assets as at December 31, 2025 and 2024, as it believes it is unlikely that such deferred tax assets will be realized against taxable income in future years.
The Company’s tax returns for 2022, 2023 and 2024 remain open to examination.
As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $886,022, which do not expire and may be carried forward indefinitely.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Feb 28, 2024 | |
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.