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Income Tax | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Tax | 11. INCOME TAX Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. British Virgin Islands (“BVI”) Under the current laws of the BVI, the Company’s entity incorporated in the BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by the entity to their shareholders, no BVI withholding tax will be imposed. UAE Under the current laws of the UAE, the Company is not subject to tax on income or capital gain. Additionally, UAE does not impose a withholding tax on payments of dividends to shareholders. Hong Kong Under the current Hong Kong Inland Revenue Ordinance, the Company’s Hong Kong subsidiaries are subject to Hong Kong profits tax at the rate of 16.5% on their taxable income generated from the operations in Hong Kong. Payments of dividends by the Hong Kong subsidiaries to the Company are not subject to withholding tax in Hong Kong. A two-tiered profits tax rates regime was introduced in 2018 where the first HK$2 million of assessable profits earned by a company will be taxed at half of the current tax rate (8.25%) whilst the remaining profits will continue to be taxed at 16.5%. There is an anti-fragmentation measure where each group will have to nominate only one company in the group to benefit from the progressive rates. PRC The Company’s PRC subsidiaries are subject to the PRC Corporate Income Tax Law (“CIT Law”) and are taxed at the statutory income tax rate of 25%, unless otherwise specified. The CIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the CIT Law define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, property, etc., of a non‑PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is more likely than not that its operations outside the PRC should be considered a resident enterprise for PRC tax purposes. 11. INCOME TAX (continued) Singapore The subsidiary incorporated in Singapore is subject to the Singapore Corporate Tax rate of 17% for the year ended December 31, 2022. Income before income taxes were generated in the following jurisdictions:
|  | For the Year Ended December 31, |
|  | 2020 |  |  | 2021 |  |  | 2022 |
|  | US$ |  |  | US$ |  |  | US$ |
Domestic component |  |  |  |  |  |  |  |  |
UAE |  |  | 63,056,081 |  |  |  | 122,422,324 |  |  |  | 99,688,931 |
Foreign components |  |  |  |  |  |  |  |  |
BVI |  |  | (976 | ) |  |  | (1,227 | ) |  |  | (3,810 | )
Mainland PRC |  |  | (57,038,284 | ) |  |  | (35,920,356 | ) |  |  | (16,736,026 | )
HK S.A.R. |  |  | 65,233 |  |  |  | 286,843 |  |  |  | 593,949 |
Cayman Islands |  |  | (2,007,587 | ) |  |  | (2,152,866 | ) |  |  | (1,497,198 | )
Singapore |  |  | — |  |  |  | (20,447 | ) |  |  | (409,018 | )
Total |  |  | 4,074,467 |  |  |  | 84,614,271 |  |  |  | 81,636,828 |
Income tax expense recognized in the consolidated statements of comprehensive income consists of current income tax expense. The Company is headquartered in the UAE and the subsidiaries incorporated in UAE functions as the Company’s primary business operation center. Therefore, the Company uses the UAE’s income tax rate as applicable statutory income tax rate. The effective income tax rate for the years ended December 31, 2020, 2021 and 2022 was 21.1%, 2.4% and 3.2%, respectively. All the income tax expense was related to the subsidiaries located in PRC and Hong Kong, which were subject to the PRC statutory income tax at the rate of 25% for their taxable income and Hong Kong profits tax at the rate of 8.25% for first HK$2 million and remaining profits taxed at 16.5% on its taxable income generated from the operations in Hong Kong. Deferred income tax assets and liabilities are as follows:
|  | As of December 31, |
|  | 2021 |  |  | 2022 |
|  | US$ |  |  | US$ |
Deferred tax assets |  |  |  |  |  |
Operating lease liabilities |  |  | 167,083 |  |  |  | 400,766 |
Impairment loss |  |  | — |  |  |  | 179,479 |
Net operating loss carry forwards |  |  | 28,779 |  |  |  | 287,345 |
Total gross deferred tax assets |  |  | 195,862 |  |  |  | 867,590 |
Valuation allowance on deferred tax assets |  |  | (28,779 | ) |  |  | (466,824 | )
Deferred tax assets, net of valuation allowance |  |  | 167,083 |  |  |  | 400,766 |
Deferred tax liabilities |  |  |  |  |  |
Operating lease right-of-use assets |  |  | 167,083 |  |  |  | 400,766 |
Total gross deferred tax liabilities |  |  | 167,083 |  |  |  | 400,766 |
Net deferred tax assets |  |  | — |  |  |  | — |
11. INCOME TAX (continued) Changes in valuation allowance are as follows:
|  | As of December 31, |
|  | 2021 |  |  | 2022 |
|  | US$ |  |  | US$ |
Balance at the beginning of the year |  |  | 3,334 |  |  |  | 28,779 |
Additions |  |  | 25,445 |  |  |  | 438,045 |
Reversals |  |  | — |  |  |  | — |
Balance at the end of the year |  |  | 28,779 |  |  |  | 466,824 |
A valuation allowance is provided against deferred income tax assets when the Group determines that it is more likely than not that the deferred income tax assets will not be utilized in the foreseeable future. In making such determination, the Group evaluates a variety of factors including the Group’s operating history, accumulated deficit or retained earnings, existence of taxable temporary differences and reversal periods.

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