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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes |
15. | INCOME TAXES
Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. British Virgin Islands Under the current laws of the British Virgin Islands, entities incorporated in the British Virgin Islands are not subject to tax on their income or capital gains. Hong Kong Under the Hong Kong tax laws, the Company’s subsidiary in Hong Kong is subject to Hong Kong’s two-tiered profits tax regime, under which the tax rate is 8.25% for assessable profits on the first HK$2 million and 16.5 % for any assessable profits in excess of HK$2 million. Additionally, the Company’s subsidiary in Hong Kong may be exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. PRC The Company’s subsidiaries in the PRC are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax L aw (the “EIT Law”), which was effective since January 1, 2008. Pursuant to Caishui [2019] No. 13, qualified Small-Scale Enterprises with minimal profits (“SSE”) are eligible for a reduced enterprise income tax (“EIT”) rate of 20%, a 75% reduction of the first RMB1 million taxable income and a 50% reduction of taxable income exceeding RMB1 million but less than RMB3 million from January 1, 2019 to December 31, 2021. Additionally, qualified SSEs are eligible for a further 12.5% reduction of the first RMB1 million taxable income from rom January 1, 2021 to December 31, 2022. The Company’s PRC subsidiaries are generally subject to statutory income tax rate of 25% except for certain PRC subsidiaries that are taxed at preferential tax rate of 20% as qualified as SSE. The EIT L aw also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise (“FIE”) to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. The current and deferred components of income tax expenses appearing in the consolidated statements of comprehensive loss are as follows:
|  | For the years ended December 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2021 |
|  | RMB |  |  | RMB |  |  | RMB |  |  | US$ |
|  | (in thousands) |
Current tax |  |  | — |  |  |  | — |  |  |  | 9,373 |  |  |  | 1,471 |
Deferred tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | — |  |  |  | — |  |  |  | 9,373 |  |  |  | 1,471 |
The Group’s loss before income taxes by jurisdiction consisted of:
|  | For the years ended December 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2021 |
|  | RMB |  |  | RMB |  |  | RMB |  |  | US$ |
|  | (in thousands) |
Non-PRC |  |  | (114,137 | ) |  |  | (178,916 | ) |  |  | 20,929 |  |  |  | 3,284 |
PRC |  |  | (1,759,246 | ) |  |  | (2,997,998 | ) |  |  | (6,440,615 | ) |  |  | (1,010,673 | )
Tota l |  |  | (1,873,383 | ) |  |  | (3,176,914 | ) |  |  | (6,419,686 | ) |  |  | (1,007,389 | )
The reconciliations of the income tax expenses for the years ended December 31, 2019, 2020 and 2021 were as follows:
|  | For the years ended December 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2021 |
|  | RMB |  |  | RMB |  |  | RMB |  |  | US$ |
|  | (in thousands) |
Loss before income tax expense |  |  | (1,873,383 | ) |  |  | (3,176,914 | ) |  |  | (6,419,686 | ) |  |  | (1,007,389 | )
PRC statutory tax rate |  |  | 25 | % |  |  | 25 | % |  |  | 25 | % |  |  | 25 | %
Income tax benefit computed at the statutory income tax rate |  |  | (468,346 | ) |  |  | (794,228 | ) |  |  | (1,604,922 | ) |  |  | (251,847 | )
Non-deductible expenses |  |  | 17,455 |  |  |  | 6,368 |  |  |  | (8,320 | ) |  |  | (1,306 | )
Transfer pricing adjustment |  |  | — |  |  |  | — |  |  |  | 102,468 |  |  |  | 16,079 |
Non-taxable income |  |  | — |  |  |  | (126 | ) |  |  | (1,561 | ) |  |  | (245 | )
Research and development super-deduction |  |  | (5,831 | ) |  |  | (55,306 | ) |  |  | 64,806 |  |  |  | 10,170 |
Statutory income/(expense) |  |  | 80,846 |  |  |  | 7,298 |  |  |  | (5,244 | ) |  |  | (823 | )
Effect of preferential tax |  |  | 137,154 |  |  |  | 22,992 |  |  |  | 5,022 |  |  |  | 788 |
Changes in valuation allowances |  |  | 353,871 |  |  |  | 784,611 |  |  |  | 1,465,818 |  |  |  | 230,019 |
Impact of changes in tax rate on deferred tax |  |  | (143,683 | ) |  |  | (16,464 | ) |  |  | (5,023 | ) |  |  | (788 | )
Effect of income tax rate difference in other jurisdictions |  |  | 28,534 |  |  |  | 44,855 |  |  |  | (3,671 | ) |  |  | (576 | )
Income tax expenses |  |  | — |  |  |  | — |  |  |  | 9,373 |  |  |  | 1,471 |
The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2020 and 2021 are as follows:
|  | As of December 31, |
|  | 2020 |  |  | 2021 |  |  | 2021 |
|  | RMB |  |  | RMB |  |  | US$ |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Operating lease liabilities |  |  | 366,618 |  |  |  | 553,397 |  |  |  | 86,840 |
Accrued expenses and other current liabilities |  |  | 6,139 |  |  |  | 4,134 |  |  |  | 649 |
Government subsidies |  |  | — |  |  |  | 15,000 |  |  |  | 2,354 |
Tax losses carried forward |  |  | 1,235,164 |  |  |  | 2,700,304 |  |  |  | 423,736 |
Less: valuation allowances * |  |  | (1,253,620 | ) |  |  | (2,719,438 | ) |  |  | (426,739 | )
Total deferred tax assets, net. |  |  | 354,301 |  |  |  | 553,397 |  |  |  | 86,840 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  |  | (354,301 | ) |  |  | (553,397 | ) |  |  | (86,840 | )
Total deferred tax liabilities, net. |  |  | (354,301 | ) |  |  | (553,397 | ) |  |  | (86,840 | )
Deferred tax assets/liabilities, net |  |  | — |  |  |  | — |  |  |  | — |
| * | The Company operates through its PRC subsidiaries and evaluates the potential realization of deferred tax assets on an entity basis. The Group recorded valuation allowances against deferred tax assets of those PRC subsidiaries that are in a three-year cumulative financial loss or had incurred losses since inception as of December 31, 2020 and 2021. In making such determination, the Group also evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods.
The tax losses in the PRC subsidiaries can be carried forward for five to ten years to offset future taxable income. As of December 31, 2021, the Group had tax loss carried forwards of RMB2,700.3 million (US$423.7 million), which will expire between 2024 to 2029. The unrecognized tax benefits of the Group as of December 31, 2020 and 2021 are as follows:
|  | As of December 31, |
|  | 2020 |  |  | 2021 |  |  | 2021 |
|  | RMB |  |  | RMB |  |  | US$ |
|  | (in thousands) |
Balance at beginning of the year |  |  | 593 |  |  |  | 593 |  |  |  | 93 |
Additions |  |  | — |  |  |  | 117,468 |  |  |  | 18,433 |
Decreases |  |  | — |  |  |  | — |  |  |  | — |
Settlement |  |  | — |  |  |  | (593 | ) |  |  | (93 | )
Balance at end of the year |  |  | 593 |  |  |  | 117,468 |  |  |  | 18,433 |
As of December 31, 2020 and 2021, the Company had recorded unrecognized tax benefit of RMB0.6 million and RMB117.5 million (US$18.4 million), of which RMB0.6 million and RMB108.1 million (US$17.0 million), respectively, are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. It is possible that the amount of unrecognized tax benefit will further change in the next 12 months; however, an estimate of the range of the possible change cannot be made at this time. As of December 31, 2020 and 2021, there were RMB nil and RMB9.4 million (US$1.5 million) of unrecognized tax benefits that, if ultimately recognized, will impact the effective tax rate. The Company did no t record any interest and penalties related to an uncertain tax position for the periods presented. As of December 31, 2021, the tax years ended December 31, 2018 through period ended December 31, 2021 remain open to examination by the PRC tax authorities.

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