Planet Green Holdings Corp. Income Taxes Disclosure

15. Income Taxes

 

United States

 

On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Act”) was enacted. Under the provisions of the Act, the U.S. corporate tax rate decreased from 34% to 21%. As the Company has a December 31 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of 21% for the Company’s fiscal year ending December 31, 2025 and 2024, respectively. Accordingly, the Company has remeasured the Company’s deferred tax assets on net operating loss carryforwards (“NOLs”) in the U.S at the lower enacted cooperated tax rate of 21%. However, this remeasurement has no effect on the Company’s income tax expenses as the Company has provided a 100% valuation allowance on its deferred tax assets previously.

 

Additionally, the Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The change in rate has caused the Company to remeasure all U.S. deferred income tax assets and liabilities for temporary differences and NOLs and recorded one time income tax payable to be paid in 8 years. However, this one-time transition tax has no effect on the Company’s income tax expenses as the Company has no undistributed foreign earnings prior to December 31, 2025 which the Company has foreign cumulative losses at December 31, 2024.

 

British Virgin Islands

 

Planet Green Holdings Corporation BVI is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will be imposed.

 

Hong Kong

 

PinnacleTech HK Limited is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Under Hong Kong tax law, PinnacleTech HK Limited is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.

 

PRC

 

The Company PRC subsidiaries and their controlled entities are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC, Chinese enterprises are subject to income tax at a rate of 25% after appropriate tax adjustments.

 

Significant components of the income tax expense consisted of the following for the years ended December 31, 2025 and 2024: 

 

		For the Years Ended December 31,
		2025				2024
Loss attributed to PRC operations		$	(2,284,057	)		$	(1,953,872	)
Loss attributed to U.S. operations			(15,462,443	)			(852,615	)
Income attributed to Canada operations			(33,697	)			233,401
Income attributed to BVI			-				-
Loss before tax		$	(17,780,197	)		$	(2,573,086	)
PRC Statutory Tax at 25% Rate			(571,014	)			(488,468	)
Effect of tax exemption granted			-				-
Valuation allowance			582,313				488,468
Income tax		$	11,299			$	-

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.

 

Reconciliation of effective income tax rate from continuing operations is as follows for the years ended December 31, 2025 and 2024:

 

		For the Years Ended December 31,
		2025				2024
U.S. federal statutory income tax rate			21.0	%			21.0	%
Higher (lower) rates in PRC, net			4.0	%			4.0	%
Non-recognized deferred tax benefits in the PRC			(25.1	)%			(25.0	)%
The Company’s effective tax rate			(0.1	)%			-	%