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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | 18. INCOME TAXES US The Company is incorporated in the U.S. and is subject to the U.S. state and federal income tax. Net operating losses incurred in taxable years beginning after December 31, 2017 are permitted to be carried forward indefinitely but may not be carried back. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted and signed into law in the United States. The CARES Act includes measures to assist companies, including temporary changes to income and non-income-based tax laws. The CARES Act contains several corporate income tax provisions, including making remaining alternative minimum tax (AMT) credits immediately refundable; providing a 5-year carryback of net operating losses (NOLs) generated in tax years 2018, 2019, and 2020 and suspending the 80 percent taxable income limitation through 2020. Any portion of an NOL that arises in a tax year between 2018-2021 that is not previously absorbed is subject to the 80 percent limitation in tax years beginning after 2020. The CARES Act did not have a material impact on the Company’s tax provision for the years ended December 31, 2020, 2021 and 2022. PRC Under the Enterprise Income Tax Law of the PRC (the “EIT Law”), PRC enterprise income tax is generally calculated at 25% of the Company’s subsidiaries located in the PRC as determined in accordance with the EIT Law, except for certain subsidiaries which enjoy tax rates substantially lower than 25% due to incentive policies. MPS was recognized as a “New and High Tech Enterprise” (“NHTE”) by the relevant PRC government authorities in 2018 and 2021. Therefore, MPS, as the NHTE, is entitled to an income tax rate of 15% for 2020, 2021 and 2022. Huzhou Hongwei New Energy Automobile Co., Ltd. (“Hongwei”) was recognized as a NHTE by the relevant PRC government authorities in 2020 and it is entitled to an income tax rate of 15% for 2020, 2021 and 2022. The withholding tax rate of 10% under the EIT Law is imposed on dividends declared to foreign investors with respect to profit earned by PRC subsidiaries from January 1, 2008 onward. Deferred tax liability was not provided with respect to undistributed profits of relevant PRC subsidiaries for the years ended December 31, 2020, 2021 and 2022, as the Group concluded that profits generated by the relevant PRC subsidiaries are considered to be permanently reinvested, because the Group does not have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future and intends to retain all of its available funds and any future earnings for use in the operation and expansion of its business. UK UK corporation tax is calculated at an average tax rate of 19% for the years ended December 31, 2020, 2021 and 2022, respectively. The estimated assessable profit generated by the Company’s subsidiary located in UK would be subject to corporation tax at such rate, in accordance with the Corporation Tax Acts. The Company did not have taxable profit and no corporation tax expense was recorded for the years ended December 31, 2020, 2021 and 2022. Germany German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at an average tax rate of 31.9%, 29.1% and 27.9% for the years ended December 31, 2020, 2021 and 2022, respectively, for the Company’s subsidiary located in Germany in accordance with relevant tax rules and regulations in Germany. A provision for income tax of $1, $ nil, and $33 has been recognized for the years ended December 31, 2020, 2021 and 2022, respectively. Loss before provision for income taxes for the years ended December 31, 2020, 2021 and 2022 was as follows:
| December 31, 2020 |  | December 31, 2021 |  | December 31, 2022
Domestic(USA) | $ | (3,584) |  |  | $ | (98,821) |  |  | $ | (116,353) |
Foreign | (30,040) |  |  | (107,662) |  |  | (41,814) |
Loss before income tax | $ | (33,624) |  |  | $ | (206,483) |  |  | $ | (158,167) |
The current and deferred components of the income tax expense in the consolidated statements of operations were as follows:
| December 31, 2020 |  | December 31, 2021 |  | December 31, 2022
Current tax expense | 1 |  |  | — |  |  | 33 |
Deferred tax expense | — |  |  | — |  |  | — |
Total provision for income taxes | $ | 1 |  |  | $ | — |  |  | $ | 33 |
The components of the Group’s deferred tax assets are as follows:
| December 31, 2021 |  | December 31, 2022
Deferred tax assets: |  |  |
Net operating loss carry-forwards | $ | 38,858 |  |  | $ | 54,459 |
Allowance for doubtful accounts and inventory provision | 4,712 |  |  | 3,311 |
Product warranty | 8,769 |  |  | 6,309 |
Impairment of property, plant and equipment | 1,210 |  |  | 1,367 |
Deferred income | 392 |  |  | 334 |
Accrued expense | 239 |  |  | 235 |
Others | 920 |  |  | 838 |
Less: valuation allowance | (55,100) |  |  | (66,853) |
Net deferred tax assets | $ | — |  |  | $ | — |
The movements of valuation allowance for the years end December 31, 2020, 2021 and 2022 are as follows:
| December 31, 2020 |  | December 31, 2021 |  | December 31, 2022
Balance at beginning of the year | $ | 30,857 |  |  | $ | 37,287 |  |  | $ | 55,100 |
Additions | 7,402 |  |  | 17,912 |  |  | 11,838 |
Reversal | (972) |  |  | (99) |  |  | (85) |
Balance at end of the year | $ | 37,287 |  |  | $ | 55,100 |  |  | $ | 66,853 |
Reconciliation between the income tax expense computed by applying the U.S. federal corporate income tax rate of 21% to loss before income tax and actual provision is as follows:
| December 31, 2020 |  | December 31, 2021 |  | December 31, 2022
Loss before income tax | $ | (33,624) |  |  | $ | (206,483) |  |  | $ | (158,167) |
Tax credit at the U.S. federal corporate income tax rate of 21% | (7,061) |  |  | (43,361) |  |  | (33,214) |
Tax effect of permanent differences – share-based compensation | — |  |  | 17,408 |  |  | 20,098 |
Tax effect of permanent differences – others | (2,152) |  |  | (1,411) |  |  | (4,295) |
Tax effect of income tax rate difference in other jurisdictions | 2,511 |  |  | 6,287 |  |  | 1,657 |
Changes in valuation allowance | 6,702 |  |  | 21,077 |  |  | 15,754 |
Others | 1 |  |  | — |  |  | 33 |
Income tax expense | $ | 1 |  |  | $ | — |  |  | $ | 33 |
As of December 31, 2022, the Group had $324,850 operating loss carried forward. The operating loss carried forward for the Company’s PRC subsidiaries amounted to $257,498, which will expire on various dates from 2023 to 2032. For the remaining operating loss, $67,352 will be carried forward indefinitely. The Group determined the valuation allowance on an entity by entity basis and assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. The valuation allowance is primarily related to entities with net operating loss carry-forwards for which the Group does not believe it will ultimately be realized.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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