NOCERA, INC. Income Taxes Disclosure

Note 16     INCOME TAXES

 

The Company and its subsidiary, and the consolidated VIE file tax returns separately.

 

United States

 

The Company evaluated the Global Intangible Low Taxed Income (“GILTI”) inclusion on current earnings and profits of greater than 10% owned foreign controlled corporations. The Company has evaluated whether it has additional provision amount resulted by the GILTI inclusion on current earnings and profits of its foreign controlled corporations. The law also provides that corporate taxpayers may benefit from a 50% reduction in the GILTI inclusion, which effectively reduces the 21% U.S. corporate tax rate on the foreign income to an effective rate of 10.5%. The GILTI inclusion further provides for a foreign tax credit in connection with the foreign taxes paid.

   

PRC

 

WFOE and the consolidated VIE established in the PRC are subject to the PRC statutory income tax rate of 25%, according to the PRC Enterprise Income Tax (“EIT”) law. The PRC net operating loss can generally carry forward for no longer than five years starting from the year subsequent to the year in which the loss was incurred.

 

Taiwan

 

The Company’s loss before income taxes is primarily derived from the operations in Taiwan and income tax expense is primarily incurred in Taiwan. The statutory income tax rate in Taiwan is 20%. An additional surtax of 5%, is assessed on undistributed income for the entities in Taiwan, but only to the extent such income is not distributed or set aside as a legal reserve before the end of the following year. The 5% surtax is recorded in the period the income is earned, and the reduction in the surtax liability is recognized in the period the distribution to stockholders or the setting aside of legal reserve is finalized in the following year.

  

The components of the income tax (benefit) expense are:

Schedule of income tax components
		For the years ended December 31,
		2025				2024
		$				$
Current			(251,972	)			(237,071	)
Deferred			–				–
Total income tax expense (benefit)			(251,972	)			(237,071	)

 

The tax effects of temporary differences representing deferred income tax assets and liabilities result principally from the following:

Schedule of deferred income taxes
			December 31, 2025				December 31, 2024
			$				$
Deferred tax assets
Tax loss carried forward			(5,499,568	)			(4,990,445	)
Allowance for doubtful receivables			–				126,049
Total deferred tax assets			(5,499,568	)			(4,774,396	)
Reversal of deferred tax assets			–				–
Less: valuation allowance			5,499,568				4,774,396
Total deferred tax assets, net			–				–
Deferred tax liabilities
Property and equipment, difference in depreciation			(1,476	)			(81,522	)
Capital allowance			1,476				81,522
Deferred tax liabilities, net			–				–

 

The valuation allowance as of December 31, 2025 and 2024 was primarily provided for the deferred income tax assets if it is more likely than not that these items will expire before the Company is able to realize its benefits, or that the future deductibility is uncertain. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment. The movement for the valuation allowance is as following.

Schedule of movement in valuation allowance
		December 31, 2025				December 31, 2024
		$				$
Balance at beginning of the year			95,844				95,844
Additions of valuation allowance			–				–
Reductions of valuation allowance			–				–
Balance at the end of the year			95,844				95,844