XML 36 R24.htm IDEA: XBRL DOCUMENT
v3.21.2

Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities | 9 Months Ended
--- | ---
Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities |
| 18. | Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities
| (a) | Income taxes in the condensed consolidated statements of comprehensive loss (income)
The Company’s provision for income taxes expenses consisted of:
|  |  | Three months ended September 30, |  |  |  | Nine months ended September 30, |
|  |  | 2020 |  |  |  | 2021 |  |  |  | 2020 |  |  |  | 2021 |
PRC income tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Deferred |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
United States Tax CBAK is a Nevada corporation that is subject to U.S. corporate income tax on its taxable income at a rate of up to 21% for taxable years beginning after December 31, 2017 and U.S. corporate income tax on its taxable income of up to 35% for prior tax years. The U.S. Tax Reform signed into law on December 22, 2017 significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump sum. The U.S. Tax Reform also includes provisions for a new tax on GILTI effective for tax years of foreign corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations (“CFCs”), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations. The Company’s management is still evaluating the effect of the U.S. Tax Reform on CBAK. Management may update its judgment of that effect based on its continuing evaluation and on future regulations or guidance issued by the U.S. Department of the Treasury, and specific actions the Company may take in the future. To the extent that portions of CBAK’s U.S. taxable income, such as Subpart F income or GILTI, are determined to be from sources outside of the U.S., subject to certain limitations, Sohu.com Inc. may be able to claim foreign tax credits to offset its U.S. income tax liabilities. If dividends that CBAK receives from its subsidiaries are determined to be from sources outside of the U.S., subject to certain limitations, CBAK will generally not be required to pay U.S. corporate income tax on those dividends. Any liabilities for U.S. corporate income tax will be accrued in the Company’s consolidated statements of comprehensive income and estimated tax payments will be made when required by U.S. law. No provision for income taxes in the United States or elsewhere has been made as CBAK had no taxable income for the three and nine months ended September 30, 2020 and 2021. Hong Kong Tax The Company’s subsidiaries in Hong Kong are subject to Hong Kong profits tax rate of 16.5% and did not have any assessable profits arising in or derived from Hong Kong for the three and nine months ended September 30, 2019 and 2020 and accordingly no provision for Hong Kong profits tax was made in these periods. PRC Tax The Company’s subsidiaries in China are subject to enterprise income tax at 25% for the three months and nine months ended September 30, 2020 and 2021. A reconciliation of the provision for income taxes determined at the statutory income tax rate to the Company’s income taxes is as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2020 |  |  | 2021 |  |  | 2020 |  |  | 2021 |
Income (Loss) before income taxes |  | $ | 41,715 |  |  | $ | 20,023,221 |  |  | $ | (3,510,563 | ) |  | $ | 52,351,612 |
United States federal corporate income tax rate |  |  | 21 | % |  |  | 21 | % |  |  | 21 | % |  |  | 21 | %
Income tax (credit) expenses computed at United States statutory corporate income tax rate |  |  | 8,760 |  |  |  | 4,204,877 |  |  |  | (737,218 | ) |  |  | 10,993,839 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rate differential for PRC earnings |  |  | 15,480 |  |  |  | (104,422 | ) |  |  | (79,959 | ) |  |  | (132,095 | )
Non-deductible expenses (non-taxable income) |  |  | 38,529 |  |  |  | (4,764,089 | ) |  |  | 187,432 |  |  |  | (11,993,447 | )
Share based payments |  |  | 33,973 |  |  |  | 19,067 |  |  |  | 129,333 |  |  |  | 70,007 |
Valuation allowance on deferred tax assets |  |  | (96,742 | ) |  |  | 644,567 |  |  |  | 500,412 |  |  |  | 1,061,696 |
Income tax expenses |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
| (a) | Deferred tax assets and deferred tax liabilities
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2020 and September 30, 2021 are presented below:
|  | December 31, |  |  | September 30, |
|  | 2020 |  |  | 2021 |
Deferred tax assets |  |  |  |  |  |
Trade accounts receivable |  | $ | 1,354,762 |  |  | $ | 1,248,059 |
Inventories |  |  | 575,575 |  |  |  | 646,198 |
Property, plant and equipment |  |  | 1,271,986 |  |  |  | 1,130,024 |
Impairment on non-marketable equity securities |  |  | - |  |  |  | 173,317 |
Provision for product warranty |  |  | 497,901 |  |  |  | 499,574 |
Net operating loss carried forward |  |  | 31,060,254 |  |  |  | 32,125,002 |
Valuation allowance |  |  | (34,760,478 | ) |  |  | (35,822,174 | )
Deferred tax assets, non-current |  | $ | - |  |  | $ | - |
Deferred tax liabilities, non-current |  | $ | - |  |  | $ | - |
As of December 31, 2020 and September 30, 2021, the Company’s U.S. entity had net operating loss carry forwards of $103,580,741, of which $102,293 available to reduce future taxable income which will expire in various years through 2035 and $103,478,448 available to offset capital gains recognized in the succeeding 5 tax years and the Company’s PRC subsidiaries had net operating loss carry forwards of $37,536,687 and $45,154,800, respectively, which will expire in various years through 2023 to 2029. Management believes it is more likely than not that the Company will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future. As a result, a valuation allowance was provided against the full amount of the potential tax benefits. According to the 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 its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The impact of an uncertain income tax positions on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The significant uncertain tax position arose from the subsidies granted by the local government for the Company’s PRC subsidiary, which may be modified or challenged by the central government or the tax authority. A reconciliation of January 1, 2021 through September 30, 2021 amount of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) is as follows:
|  | Gross UTB |  |  | Surcharge |  |  | Net UTB |
Balance as of January 1, 2021 |  | $ | 7,511,182 |  |  | $ | - |  |  | $ | 7,511,182 |
Increase in unrecognized tax benefits taken in current period |  |  | 95,495 |  |  |  | - |  |  |  | 95,495 |
Balance as of September 30, 2021 |  | $ | 7,606,677 |  |  | $ | - |  |  | $ | 7,606,677 |
As of December 31, 2020 and September 30, 2021, the Company had not accrued any interest and penalties related to unrecognized tax benefits.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration