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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES |
9 . | INCOME TAXES
Income tax expense consist s of the following:
|  | Year ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
|  | RMB |  |  | RMB |  |  | RMB |
Current income tax expense: |  |  |  |  |  |  |  |  |  |  |  |
PRC |  |  | 80,548 |  |  |  | 111,552 |  |  |  | 168,924 |
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
PRC |  |  | 81,099 |  |  |  | (17,637 | ) |  |  | (131,917 | )
Total income tax expense |  |  | 161,647 |  |  |  | 93,915 |  |  |  | 37,007 |
Cayman Islands Jiayin Group Inc. is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, Jiayin Group Inc. is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands. Hong Kong The Parent Company subsidiary, Jiayin (HK) Limited, is located in Hong Kong and is subject to an income tax rate of 16.5% for taxable income earned in Hong Kong. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Parent Company are not subject to any Hong Kong withholding tax. No income tax provision has been made in the consolidated financial statements as it has no assessable income for the years ended December 31, 2017, 2018 and 2019 , respectively . PRC Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), the Company ’s subsidiaries and VIEs incorporated in the PRC are subject to statutory rate of 25%. High-technology enterprises may obtain a preferential tax rate of 15% provided they meet the related criteria. Niwodai Internet renewed high-new technology enterprise (“HNTE”) certificate on November 23, 2017, thus Niwodai Internet was entitled to enjoy a preferential Enterprise Income Tax (“EIT”) rate of 15% from 2017 to 2019. The Company estimated that Niwodai Internet will not be qualified as a HNTE since year 2020 and plan n ed not to renew the certificate, thus Niwodai Internet shall be subject to EIT rate of 25% starting from year 2020. Uncertainties exist with respect to how the current income tax law in the PRC applies to the Company’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese i ncome tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting and properties, occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Company does not believe that the legal entities organized outside of the PRC within the Company should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that the Parent Company and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Parent Company and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a statutory income tax rate of 25%. The Parent Company and its subsidiaries outside the PRC do not have any assessable profits as of December 31, 2018 and 2019, therefore, the Company is not subject to any uncertain tax position. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB 0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. From inception to 2019, the Company is subject to examination of the PRC tax authorities. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table sets forth the significant components of the deferred tax assets and deferred tax liabilities:
|  | Year Ended December 31, |
|  | 2018 |  |  | 2019 |
|  | RMB |  |  | RMB |
Deferred tax assets |  |  |  |  |  |  |  |
Payroll and welfare payable |  |  | 16,880 |  |  |  | 12,131 |
Accrued expenses |  |  | 20,462 |  |  |  | 16,199 |
Allowance for uncollectible receivables and contract assets |  |  | 101,048 |  |  |  | 37,932 |
Liabilities from the investor assurance program |  |  | 306,655 |  |  |  | — |
Net loss carryforward |  |  | 576,810 |  |  |  | 13,595 |
Liabilities related to customer incentive |  |  | 23,423 |  |  |  | 44,216 |
Gross deferred tax assets |  |  | 1,045,278 |  |  |  | 124,073 |
Valuation allowances |  |  | (619,533 | ) |  |  | (1,909 | )
Net deferred tax assets |  |  | 425,745 |  |  |  | 122,164 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Uncollected revenues |  |  | (369,718 | ) |  |  | (53,872 | )
Total deferred tax liabilities |  |  | (369,718 | ) |  |  | (53,872 | )
Net deferred tax assets (after offsetting) |  |  | 56,027 |  |  |  | 68,292 |
Deferred tax assets and liabilities have been offset where the Company has a legally enforceable right to do so, and intends to settle on a net basis. The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies, and (iv) specific known trend of profits expected to be reflected within the industry. On the basis of this evaluation, valuation allowances of RMB 619,533 , and RMB 1,909 have been established for deferred tax assets as of December 31, 2018 and 2019 respectively , based on a more likely than not threshold due to cumulated loss and uncertainty of sufficient profit generated in future years for certain subsidiary within the Company . The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carry forwards period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. At December 31, 2017, 2018 and 2019, tax loss carry-forward amounted to RMB 2,076,261 , RMB 2,307,241 and RMB 54,380, and would expire in calendar year 2022 to 2024 if not utilized, respectively. The Company operates its business through its subsidiaries and VIEs. The Company does not file consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs may not be used to offset other subsidiaries’ or VIEs’ earnings within the Company. In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Parent Company has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. The Company plans to indefinitely reinvest undistributed profits earned from its China subsidiaries in its operations in the PRC. Therefore, no withholding income taxes for undistributed profits of the Company’s PRC subsidiaries have been provided as of December 31, 2018 and 2019. The aggregate undistributed earnings of the Company’s PRC subsidiaries that are available for distribution was nil as of December 31, 2018 and 2019. A deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting amounts over tax basis amounts, including those differences attributable to a more than 50% interest in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Company does not accrue deferred tax liabilities on the earnings of the VIEs given that the Company’s VIEs had accumulated deficits as of December 31, 2018 and 2019. Reconciliations of the differences between PRC statutory income tax rate and the Company’s effective income tax rate for the years ended December 31, 2017, 2018 and 2019 are as follows:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
|  | RMB |  |  | RMB |  |  | RMB |
Statutory income tax rate |  |  | 25.00 | % |  |  | 25.00 | % |  |  | 25.00 | %
Non-deductible expense |  |  | 2.57 | % |  |  | 2.62 | % |  |  | 6.66 | %
Research and Development expense super deduction |  |  | (0.31 | %) |  |  | (1.44 | %) |  |  | (2.97 | %)
Effect of tax holiday |  |  | (4.24 | %) |  |  | (12.87 | %) |  |  | (18.86 | %)
Different tax rate of entities operating in other jurisdiction |  |  | 0.00 | % |  |  | 0.00 | % |  |  | (0.07 | %)
Valuation allowance |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.32 | %
Change in tax rate |  |  | 0.79 | % |  |  | 0.00 | % |  |  | (3.13 | %)
True up |  |  | 0.00 | % |  |  | 0.00 | % |  |  | (0.40 | % )
Effective tax rate |  |  | 23.81 | % |  |  | 13.31 | % |  |  | 6.55 | %
The effect of the tax holiday on the income per share is as follows:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
|  | RMB |  |  | RMB |  |  | RMB |
Tax saving amount due to HNTE status |  |  | 29,739 |  |  |  | 90,819 |  |  |  | 106,516 |
Tax saving amount due to other jurisdiction |  |  | — |  |  |  | — |  |  |  | (411 | )
Income per share effect-basic and diluted |  |  | 0.15 |  |  |  | 0.45 |  |  |  | 0.50 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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