XML 39 R27.htm IDEA: XBRL DOCUMENT
v3.24.1.1.u2

Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities | 3 Months Ended
--- | ---
Mar. 31, 2024
Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities [Abstract] |
Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities |
| 21. | Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities
(a) Income taxes in the condensed consolidated statements of comprehensive income (loss) The Company’s provision for income taxes credit (expenses) consisted of:
|  | Three months ended March 31, |
|  | 2023 |  |  | 2024 |
PRC income tax |  |  |  |  |  |
Current income tax |  | $ | - |  |  | $ | (1,048,786 | )
Deferred income tax credit |  |  | 402,884 |  |  |  | - |
|  | $ | 402,884 |  |  | $ | (1,048,786 | )
United States Tax CBAK is a Nevada corporation that is subject to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions go into effect starting January 1, 2018. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed U.S. tax law and included a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries. The Company recognizes taxes due under the GILTI provision as a current period expense. As of December 31, 2023 and March 31, 2024, the Company does not have any aggregated positive tested income; and as such, does not have additional provision amount recorded for GILTI tax. No provision for income taxes in the United States has been made as CBAK had no taxable income for the three months ended March 31, 2023 and 2024. Hong Kong Tax BAK Asia and BAK Investment 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 months ended March 31, 2023 and 2024 and accordingly no provision for Hong Kong profits tax was made in these periods. PRC Tax The CIT Law in China applies an income tax rate of 25% to all enterprises but grants preferential tax treatment to High-New Technology Enterprises. CBAK Power was regarded as a “High-new technology enterprise” pursuant to a certificate jointly issued by the relevant Dalian Government authorities. The certificate was valid for three years commencing from year 2021. Under the preferential tax treatment, CBAK Power was entitled to enjoy a tax rate of 15% for the years from 2021 to 2024 provided that the qualifying conditions as a High-new technology enterprise were met. Hitrans was regarded as a “High-new technology enterprise” pursuant to a certificate jointly issued by the relevant Zhejiang Government authorities. The certificate was valid for three years commencing from year 2021. Under the preferential tax treatment, Hitrans was entitled to enjoy a tax rate of 15% for the years from 2021 to 2024 provided that the qualifying conditions as a High-new technology enterprise were met. Nanjing CBAK was regarded as a “High-new technology enterprise” pursuant to a certificate jointly issued by the relevant Nanjing Government authorities. Under the preferential tax treatment, Nanjing CBAK was entitled to enjoy a tax rate of 15% for the years from 2023 to 2025 provided that the qualifying conditions as a High-new technology enterprise were met. 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 March 31, |
|  | 2023 |  |  | 2024 |
Income (loss) before income taxes |  | $ | (2,607,366 | ) |  | $ | 10,621,260 |
United States federal corporate income tax rate |  |  | 21 | % |  |  | 21 | %
Income tax expenses (credit) computed at United States statutory corporate income tax rate |  |  | (547,547 | ) |  |  | 2,230,465 |
Reconciling items: |  |  |  |  |  |  |  |
Rate differential for PRC earnings |  |  | (102,559 | ) |  |  | 474,162 |
Tax effect of entity at preferential tax rate |  |  | 88,661 |  |  |  | (1,591,440 | )
Non-taxable (income) expenses |  |  | 8,068 |  |  |  | 234,402 |
Share based payments |  |  | 1,028 |  |  |  | 24,482 |
Valuation allowance on deferred tax assets |  |  | 149,465 |  |  |  | (323,285 | )
Income tax (credit) expenses |  | $ | (402,884 | ) |  | $ | 1,048,786 |
(b) 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, 2023 and March 31, 2024 are presented below:
|  | December 31, 2023 |  |  | March 31, 2024 |
Deferred tax assets |  |  |  |  |  |
Trade receivable |  | $ | 1,156,095 |  |  | $ | 1,053,908 |
Inventories |  |  | 2,942,702 |  |  |  | 857,720 |
Property, plant and equipment |  |  | 2,398,035 |  |  |  | 2,291,991 |
Non-marketable equity securities |  |  | 157,432 |  |  |  | 154,756 |
Equity method investment |  |  | 380,982 |  |  |  | 347,617 |
Intangible assets |  |  | 31,601 |  |  |  | 119,443 |
Accrued expenses, payroll and others |  |  | 541,665 |  |  |  | 440,562 |
Provision for product warranty |  |  | 136,611 |  |  |  | 139,108 |
Net operating loss carried forward |  |  | 36,103,945 |  |  |  | 40,154,228 |
Valuation allowance |  |  | (43,645,828 | ) |  |  | (45,559,333 | )
Deferred tax assets, non-current |  | $ | 203,240 |  |  | $ | - |
Deferred tax liabilities, non-current |  |  |  |  |  |  |  |
Long-lived assets arising from acquisitions |  | $ | 203,240 |  |  | $ | - |
As of December 31, 2023 and March 31, 2024, 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. As of December 31, 2023 and March 31, 2024, the Company’s PRC subsidiaries had net operating loss carry forwards of $65,349,412 and $67,208,271, respectively, which will expire in various years through 2024 to 2032. 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.

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 tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration