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Income Tax
 12 Months Ended
Dec. 31, 2022
Income Tax [Abstract]  
INCOME TAX

22. INCOME TAX

 

The Company is incorporated in the United States of America and is subject to United States federal taxation. The applicable tax rate is 21% in 2022 and 2021. No provisions for income taxes have been made, as the Company had no U.S. taxable income for the years ended December 31, 2022 and 2021. For the years ended December 31, 2022 and 2021, the Company had current income tax expenses of $456,598 and $73,400, respectively. 

 

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the year ended December 31, 2022, the Company had no unrecognized tax benefits. Due to uncertainties surrounding future utilization, the Company estimates there will not be sufficient future income to realize the deferred tax assets for certain subsidiaries and a VIE.

 

The amount of unrecognized deferred tax liabilities for temporary differences related to the dividend from foreign subsidiaries is not determined because such determination is not practical.

 

The Company has not provided deferred taxes on undistributed earnings attributable to its PRC and Hong Kong subsidiaries as they are to be permanently reinvested.

 

The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of ASC Topic 740, Income Taxes. Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its PRC subsidiaries do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company has not recorded any deferred taxes in relation to US tax on the cumulative amount of undistributed retained earnings since January 1, 2008.

 

Effective on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules imposed a unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign-invested enterprises in the PRC, unless they qualify under certain limited exceptions. The tax rate for pre-tax profits below RMB 1 million to RMB 3 million is 5%; the tax rate for pre-tax profits between RMB1 million to RMB 3 million is 10%. E-Commerce Tianjin, Future Supply (Chengdu) Co., Ltd. and Future Big Data (Chengdu) Co., Ltd. were subject to an enterprise income tax rate of 2.5% and 10% in 2021, the applicable tax rate is 25% in 2022. Other subsidiaries and VIE were subject to an enterprise income tax rate of 25%.

 

Each of Future Fin-Tech (Hong Kong) Limited, QR (HK) Limited and Nice Talent Asset Management Limited is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate below HKD2 million is 8.5%, exceeding HKD2 million is 16.5% in Hong Kong.

 

FTFT UK Limited is incorporated in United Kingdom and is subject to United Kingdom Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant United Kingdom tax laws. The applicable tax rate is 19% in United Kingdom.

 

FTFT Capital Investments L.L.C is incorporated in Dubai, United Arab Emirates. The applicable tax rate is nil in Dubai, United Arab Emirates.

 

Digipay Fintech Limited is incorporated in British Virgin Island. The applicable tax rate is nil in British Virgin Island.

 

FTFT Paraguay S.A. is incorporated in Republic of Paraguay. The applicable tax rate is 10%.

 

Significant components of the provision for income taxes are as follows:

 

   2022   2021 
         
Current tax  $456,598   $73,400 
Deferred tax - book-tax difference   60,504    
-
 
The provision for income taxes  $517,102   $73,400 

 

Reconciliation of the differences between the statutory EIT rate applicable to profits of the consolidated entities and the income tax expenses of the Company:

 

   2022   2021 
         
Loss before taxation  $(13,799,108)  $(11,743,625)
Notional tax on profit before CIT and Hong Kong          
Computed expected tax expense   (3,449,777)   (413,908)
Others, primarily the difference in tax rates   1,418,125    499,543 
Deferred tax assets losses not recognized   2,488,250    (12,235)
Total  $456,598   $73,400