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Income Tax Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Current and Deferred Components of Income Taxes

The current and deferred components of income taxes appearing in the consolidated statements of comprehensive income are as follows:

		Year ended December 31,
		2019				2020				2021
		RMB				RMB				RMB
Current tax expenses			52,232				44,813				26,854
Deferred tax benefit			(7,042	)			(1,492	)			(21,115	)
Income tax expenses			45,190				43,321				5,739

Reconciliation between Income Tax Expenses Computed by Applying PRC Enterprise Tax Rate Before Income Taxes and Actual Provision

Reconciliation between the income tax expenses computed by applying the PRC enterprise tax rate to income before income taxes and actual provision were as follows:

		Year ended December 31,
		2019				2020				2021
		RMB				RMB				RMB
Income from operations in the PRC			321,090				200,941				89,126
Income from overseas entities			17,930				16,826				5,504
Income before income tax			339,020				217,767				94,630
Tax expense at PRC enterprise income tax rate of 25%			84,755				54,442				23,658
Income tax on tax holiday(1)			(31,493	)			(31,074	)			(16,872	)
Tax effect of permanent differences(2)			(12,147	)			(16,895	)			(28,303	)
Change in valuation allowance(3)			1,592				29,780				22,153
Effect of share-based compensation			6,475				10,830				7,111
Effect of income tax in jurisdictions other than the PRC			(3,992	)			(3,762	)			(2,008	)
Income tax expenses			45,190				43,321				5,739

(1) The income tax on tax holidays represents the effect of preferential income tax rate enjoyed by Foshan Viomi, Guangdong Lizi and Yunmi Hulian. Foshan Viomi was qualified as an HNTE and enjoyed the beneficial tax rate of 15% for the three years ended December 31, 2019, 2020 and 2021. Foshan Viomi will need to re-apply for HNTE qualification renewal in 2022. The Company believed that Foshan Viomi can successfully obtain the renewal in 2022. Guangdong Lizi applied for the HNTE qualification and obtained approval in December 2020. It entitled to enjoy the preferential tax rate of 15% as an HNTE for three years starting from 2020 and should apply for HNTE qualification renewal in 2023. Yunmi Hulian applied for the HNTE qualification and obtained approval in December 2021. It entitled to enjoy the preferential tax rate of 15% as an HNTE for three years starting from 2021 and should apply for HNTE qualification renewal in 2024.

(2) The permanent book-tax differences mainly consisted of R&D super deductions.

(3) Valuation allowance for the years ended December 31, 2019, 2020 and 2021 are related to the deferred tax assets of certain group entities which reported loss. The Group believed that it is more likely than not that these the deferred tax assets of these entities will not be utilized. Therefore, valuation allowance has been provided.

Per Share Effect of Tax Holidays

The per share effect of the tax holidays are as follows:

		Year ended December 31,
		2019				2020				2021
		RMB				RMB				RMB
Net income per share effect – basic		0.13				0.14				0.02
Net income per share effect – diluted			0.13				0.13			0.02

Significant Components of Deferred Tax Assets

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

		As of December 31,
		2020				2021
		RMB				RMB
Accrued expenses and others			12,466				18,567
Net operating loss carry forwards			32,985				69,852
Inventories write downs			1,463				985
Deferred income			201				161
Total deferred tax assets			47,115				89,565
Less: valuation allowance			(32,926	)			(54,261	)
Deferred tax assets, net			14,189				35,304

Movement of Valuation Allowance

Movement of valuation allowance

		Year ended December 31,
		2019				2020				2021
		RMB				RMB				RMB
Balance at beginning of the year			1,554				3,146				32,926
Provided			1,592				29,780				21,335
Balance at end of the year			3,146				32,926				54,261

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the income tax exemptions and reductions which have been granted by taxing authorities for a specified period, applicable term of the exemptions and reductions, estimated dollar value of tax benefits, and per share benefits.

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