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TAXATION

12 Months Ended

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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The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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