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INCOME TAXES
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

14. INCOME TAXES

 

Cayman

 

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.

 

British Virgin Islands

 

Under the current laws of the British Virgin Islands, subsidiaries incorporated in British Virgin Islands are not subject to tax on income or capital gains.

 

United States

 

Mercurity Fintech Technology Holding Inc. (“MFH Tech”) is incorporated in New York, USA. Chaince Securities, Inc. and its subsidiary, Chaince Securities, LLC (formerly known as JVDA, LLC), are incorporated in Delaware, USA. In accordance with the Federal Corporate Income Tax Law, the Federal corporate income tax rate applicable to MFH Tech is 21%.

 

Hong Kong

 

Under the Hong Kong tax laws, the Company’s subsidiaries in Hong Kong are subject to Hong Kong profits tax rate at 16.5%.

 

People’s Republic of China

 

The enterprise income tax (‘‘EIT’’) law applies a uniform 25% EIT rate to both foreign invested enterprises and domestic enterprises. The EIT rate for the Company’s entities operating in the PRC is 25%.

 

For the six months ended June 30, 2025, 2024 and 2023, loss or income before income taxes from continuing operations consists of:

 

   2025   2024   2023 
   For the six months ended June 30, 
   2025   2024   2023 
   US$   US$   US$ 
Cayman Islands: CHAINCE DIGITAL HOLDINGS INC. (“MFH”)   (1,188,362)   (674,004)   (1,632,390)
US: Mercurity Fintech Technology Holding Inc. (“MFH Tech”)   (1,746,229)   (2,728,295)   (853,446)
US: Chaince Securities, Inc.   (33,716)   (34,286)   (15,737)
US: Chaince Securities, LLC (formerly known as JVDA, LLC)   (29,778)   —    — 
Hong Kong: Ucon Capital (HK) Limited (“Ucon”)   16,673    (11,975)   (4,678)
Hong Kong: Aifinity Base Limited   —    —    — 
PRC: Lianji Future Technology Ltd. (“Lianji Future”)   (18,740)   (58,461)   (70,436)
PRC: Chaince (Shenzhen) Consulting Co., Ltd.   —    —    — 
PRC: Yingke Precision (Shenzhen) Intelligent Manufacturing Technology Co., Ltd.   —    —    — 

 

 

The current and deferred components of the income tax expense from continuing operations in the consolidated statements of comprehensive loss are as follows:

 

   2025   2024   2023 
   For the six months ended June 30, 
   2025   2024   2023 
   US$   US$   US$ 
Current tax expense   —    —    (587)
Deferred tax benefit/(expense)   13,334    (325,646)   772 
Income tax benefit/(expense)   13,334    (325,646)   185 

 

The reconciliation of tax computed by applying the statutory income tax rate of 21% applicable to the US operation, 16.5% applicable to the Hong Kong operation, and 25% applicable to the PRC operation to income tax benefit from continuing operations is as follows:

   US
(MFH Tech)		   US
(Chaince Securities, Inc.)		   US
(Chaince Securities, LLC)		   Hong Kong   PRC   Consolidated 
   For the six months ended June 30, 2025 
   US$   US$   US$   US$   US$   US$ 
   US
(MFH Tech)		   US
(Chaince Securities, Inc.)		   US
(Chaince Securities, LLC)		   Hong Kong   PRC   Consolidated 
Loss before income taxes   (1,746,229)   (33,716)   (29,778)   16,673    (18,740)   (1,811,790)
Income tax computed at applicable tax rates   (366,708)   (7,080)   (6,254)   2,751    (4,685)   (381,976)
Current losses unrecognized deferred income tax   366,708    —    —    —    4,685    371,393 
Utilization of net operating loss carryforwards   —    —    —    (2,751)   —    (2,751)
Income tax expenses/(benefits)   —    (7,080)   (6,254)   —    —    (13,334)

 

   US
(MFH Tech)		   US
(Chaince)		   Hong Kong   PRC   Consolidated 
   For the six months ended June 30, 2024 
   US$   US$   US$   US$   US$ 
   US
(MFH Tech)		   US
(Chaince)		   Hong Kong   PRC   Consolidated 
Income/(Loss) before income taxes   (2,728,295)   (34,286)   (11,975)   (58,461)   (2,833,017)
Income tax computed at applicable tax rates   (572,942)   (7,200)   (1,976)   (14,615)   (596,733)
Current losses unrecognized deferred income tax   572,942    —    1,976    14,615    589,533 
Valuation allowances of deferred tax assets   —    —    332,846    —    332,846 
Income tax expenses/(benefits)   —    (7,200)   332,846    —    325,646 

 

 

   US
(MFH Tech)		   US
(Chaince)		   Hong Kong   PRC   Singapore   Consolidated 
   For the six months ended June 30, 2023 
   US$   US$   US$   US$   US$   US$ 
   US
(MFH Tech)		   US
(Chaince)		   Hong Kong   PRC   Singapore   Consolidated 
Income/(Loss) before income taxes   (853,446)   (15,737)   (4,678)   (70,436)   (507)   (944,804)
Income tax computed at applicable tax rates   (179,224)   (3,305)   (772)   (17,609)   (86)   (200,995)
Current losses unrecognized deferred income tax   179,224    3,305    —    17,609    86    200,224 
Prior income tax expense recognized in current period   587    —    —    —    —    587 
Income tax expenses/(benefits)   587    —    (772)   —    —    (185)

 

Deferred tax assets

 

The significant components of the Company’s deferred tax assets were as follows:

 

   June 30,   December 31, 
   2025   2024 
   US$   US$ 
Deferred tax assets          
Net operating loss carryforwards   137,943    124,609 
Impairment of intangible assets   238,821    238,821 
Valuation allowance   (332,846)   (332,846)
Total deferred tax assets   43,918    30,584 

 

Deferred tax liabilities

 

The significant components of the Company’s deferred tax liabilities were as follows:

 

   June 30,   December 31, 
   2025   2024 
    US$    US$ 
Deferred tax liabilities          
Temporary difference of intangible asset   25,200    25,200 
Total deferred tax liabilities   25,200    25,200