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TAXATION | 12 Months Ended
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Dec. 31, 2023
TAXATION |
TAXATION |
14. | TAXATION
Enterprise income tax Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Hong Kong The subsidiaries incorporated in Hong Kong are subject to income tax at the rate of 16.5% on the estimated assessable profits arising in Hong Kong. For the periods presented, the Group did not make any provisions for Hong Kong profit tax as the Group did not generate any assessable profits arising in Hong Kong. Under the Hong Kong tax law, the subsidiaries in Hong Kong are exempted from income tax on their foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. China The Group’s mainland China entities are subject to the statutory income tax rate of 25%, in accordance with the Enterprise Income Tax law (the “EIT Law”), which was effective since January 1, 2008. Certain subsidiaries of the Group being qualified as a High New Technology Enterprise (‘‘HNTE’’) are entitled to the preferential income tax rate of 15%. Dividends, interests, rent or royalties payable by the Group’s mainland China entities to non-resident enterprises, and proceeds from any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% EIT, namely withholding tax, unless the respective non-resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with China that provides for a reduced withholding tax rate or an exemption from withholding tax. Loss before income taxes consists of: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31
​ |  | 2021 |  | 2022 |  | 2023 |  | 2023
​ | ​ | RMB | ​ | RMB | ​ | RMB | ​ | US$
Mainland China |  | (1,646,607) | ​ | (2,475,677) |  | (2,139,795) |  | (301,384)
Non-Mainland China |  | 70,592 | ​ | (188,238) |  | (25,893) |  | (3,646)
​ |  | (1,576,015) | ​ | (2,663,915) |  | (2,165,688) |  | (305,030)
​ 14.TAXATION (Continued) Enterprise income tax (Continued) The current and deferred components of income tax expense appearing in the consolidated statements of comprehensive loss are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31
​ |  | 2021 |  | 2022 |  | 2023 |  | 2023
​ | ​ | RMB | ​ | RMB | ​ | RMB | ​ | US$
Current income tax expense |  | 27,593 | ​ | 59,668 |  | 42,446 | ​ | 5,978
Deferred income tax benefit |  | (11,852) | ​ | (35,195) |  | (24,487) | ​ | (3,449)
​ |  | 15,741 | ​ | 24,473 |  | 17,959 | ​ | 2,529
​ The reconciliation of income tax expense computed using the mainland China statutory tax rate to the actual income tax expense is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31
​ |  | 2021 |  | 2022 |  | 2023 |  | 2023
​ | ​ | RMB | ​ | RMB | ​ | RMB | ​ | US$
Loss before income tax |  | (1,576,015) |  | (2,663,915) |  | (2,165,688) | ​ | (305,030)
Income tax computed at the mainland China statutory tax rate of 25% | ​ | (394,004) |  | (665,978) |  | (541,422) | ​ | (76,258)
Effect of tax holiday and preferential tax rates |  | 7,083 |  | 52,651 |  | 110,393 | ​ | 15,549
Effect of different tax rates in different jurisdictions |  | (1,681) |  | 58,266 |  | 21,918 | ​ | 3,087
Other non-taxable income |  | (24,999) |  | (28,993) |  | (26,008) | ​ | (3,663)
Non-deductible expenses |  | 36,719 |  | 5,727 |  | 6,379 | ​ | 898
Share-based compensation costs |  | 108,588 |  | 90,015 |  | 45,411 | ​ | 6,396
Research and development super deduction |  | (146,639) |  | (64,718) |  | (132,163) | ​ | (18,615)
Withholding tax and others |  | 9,552 |  | 10,785 |  | 9,771 | ​ | 1,376
Change in valuation allowance |  | 434,056 |  | 525,169 |  | 397,137 | ​ | 55,936
True-up adjustments in respect of prior year’s annual tax filing |  | (3,474) |  | (15,195) |  | 49,940 | ​ | 7,034
Expiration of tax loss forward | ​ | — | ​ | 124,555 | ​ | 83,300 | ​ | 11,733
Tax rate change on deferred items |  | (9,460) |  | (67,811) |  | (6,697) | ​ | (944)
Income tax expense |  | 15,741 |  | 24,473 |  | 17,959 | ​ | 2,529
​ ​
14. | TAXATION (Continued)
Deferred tax The significant components of the Group’s deferred tax assets and liabilities are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As at December 31
​ |  | 2022 |  | 2023 |  | 2023
​ | ​ | RMB | ​ | RMB | ​ | US$
Deferred tax assets: | ​ |  |  |  |  |
Tax loss carried forward | ​ | 2,318,161 |  | 2,447,162 | ​ | 344,676
Accrued expenses | ​ | 84,428 |  | 91,794 | ​ | 12,929
Depreciation | ​ | 17,073 |  | 19,095 | ​ | 2,689
Allowance for doubtful accounts | ​ | 85,666 |  | 185,467 | ​ | 26,122
Government grant | ​ | 5,779 |  | 21,808 | ​ | 3,072
Operating lease liabilities | ​ | 57,828 |  | 28,405 | ​ | 4,001
Accrued interest | ​ | 197,767 |  | 215,659 | ​ | 30,375
Finance lease liabilities | ​ | 47,505 | ​ | 80,286 | ​ | 11,308
Impairment of long-lived assets | ​ | — | ​ | 129,036 | ​ | 18,174
Others | ​ | 8,241 |  | 11,557 | ​ | 1,628
Less: valuation allowance | ​ | (2,415,627) |  | (2,809,601) | ​ | (395,724)
​ |  | 406,821 |  | 420,668 | ​ | 59,250
Deferred tax liabilities: | ​ | ​ |  | ​ | ​ | ​
Operating lease right-of-use assets | ​ | 46,367 |  | 25,464 | ​ | 3,587
One-time deduction for fixed asset purchases | ​ | 231,532 |  | 292,141 | ​ | 41,147
Long-lived assets arising from acquisition | ​ | 238,672 |  | 204,032 | ​ | 28,737
Finance lease right-of-use assets | ​ | 41,530 | ​ | 17,452 | ​ | 2,458
Others | ​ | 15,772 |  | 24,144 | ​ | 3,401
​ |  | 573,873 |  | 563,233 | ​ | 79,330
​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax liabilities： | ​ | 167,052 | ​ | 142,565 | ​ | 20,080
​ The Group operates through several subsidiaries, VIEs and subsidiaries of VIEs and the valuation allowance is considered for each subsidiary, VIE and subsidiary of VIE on an individual basis. As of December 31, 2022 and 2023, the Group’s total deferred tax assets before valuation allowances were RMB2,822,448 and RMB3,230,269 (US$454,974), respectively. As of December 31, 2022 and 2023, the Group recorded valuation allowances of RMB2,415,627 and RMB2,809,601 (US$395,724), respectively, on its deferred tax assets that are not more-likely-than-not to be realized. As of December 31, 2023, the Group had net losses of approximately RMB10,017,814 (US$1,410,980) mainly deriving from entities in the mainland China and Hong Kong. The tax losses in the mainland China can be carried forward for five years to offset future taxable profits and the period was extended to ten years for entities that qualify as HNTE. The tax losses of entities in the mainland China will expire between 2024 and 2028 and the tax losses of entities in the mainland China that qualify as HNTE will expire between 2024 and 2033, if not utilized. The tax losses in Hong Kong can be carried forward without an expiration date. ​
14. | TAXATION (Continued)
Unrecognized tax benefits As of December 31, 2022 and 2023, the Group had unrecognized tax benefits of RMB58,718 and RMB61,030 (US$8,596), of which RMB18,179 and RMB17,440 (US$2,456), respectively, were presented as a reduction to the deferred tax assets related to tax losses carryforward, and the remaining amounts of RMB40,539 and RMB43,590 (US$6,140), respectively, were presented in other liabilities in the consolidated balance sheets. The Group does not expect the amount of unrecognized tax benefits to increase significantly in the next 12 months. As of December 31, 2022 and 2023, there were RMB40,539 and RMB43,590 (US$6,140) of unrecognized tax benefits that if recognized would impact the annual effective tax rate, respectively. A reconciliation of the beginning and ending balances of unrecognized tax benefit is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As at December 31
​ | ​ | 2022 | ​ | 2023 | ​ | 2023
​ |  | RMB |  | RMB |  | US$
Balance at beginning of the year |  | 59,049 |  | 58,718 | ​ | 8,270
Additions from the business acquisitions |  | — |  | — | ​ | —
Additions based on tax position related to current year |  | 15,894 |  | 9,449 | ​ | 1,331
Additions based on tax positions related to prior year | ​ | 22,462 | ​ | 4,652 | ​ | 655
Reductions for tax positions related to prior years | ​ | (38,687) | ​ | (11,789) | ​ | (1,660)
Balance at end of the year |  | 58,718 |  | 61,030 | ​ | 8,596
​ For the periods presented, the Group did not record any interest related to unrecognized tax benefits. In general, the tax authorities have three to five years to conduct examinations of the tax filings of the Group’s subsidiaries located in mainland China. Accordingly, the subsidiaries’ tax years of 2018 through 2023 remain open to examination by the respective tax authorities. There are no ongoing examinations by tax authorities for any of the Group’s subsidiaries.

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