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10. Taxation

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Note 10

TAXATION

The Company and its subsidiary, and the consolidated VIE file tax returns separately.

1) Value-added tax (“VAT”)

Pursuant to the Provisional Regulation of the PRC on VAT and the related implementing rules, all entities and individuals ("taxpayers") that are engaged in the sale of products in the PRC are generally required to pay VAT, at a rate of which was changed from 17% to 16% on May 1, 2018 of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayers. GZ WFH also subjected to 10% for the installment service provided.

2) Income tax

United States

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into legislation. The 2017 Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 34% to 21%, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax.

On December 22, 217, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to provide guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. The Company has completed the assessment of the income tax effect of the Tax Act and there were no adjustments recorded to the provisional amounts.

Since the Company completed the reverse merger acquisition on December 31, 2018, and did not have any operational income and expenses recorded; as such, it has no additional provision amount resulted by the Global Intangible Low Taxed Income inclusion on current earnings and profits of its foreign controlled corporations as. The Company has no transition tax for the same reason. The Company does not have any specified foreign corporations as of December 31, 2017, and therefore, is not subject to 2017 transition taxes.

Hong Kong

The HK tax reform has introduced two-tiered profits tax rates for corporations. Under the two-tiered profits tax rates regime, the profits tax rate for the first $2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations. Assessable profits above $2 million will continue to be subject to the rate of 16.5% for corporations. The Company assessed that the HK entity will not earned profit greater than $2 million, it is subject to a corporate income tax rate of 8.25%.

PRC

WFOE and the consolidated VIE established in the PRC are subject to the PRC statutory income tax rate of 25%, according to the PRC Enterprise Income Tax (“EIT”) law.

The components of the income tax provision are:

		For the years ended December 31,
		2018				2017
		$				$
Current			644,375				–
Deferred			15,148				–
Total income tax provision			659,523				–

The reconciliation of income taxes expenses computed at the PRC statutory tax rate applicable to income tax expense is as follows:

		For the years ended December 31,
		2018				2017
PRC income tax statutory rate			25.00%				25.00%
Impact of different tax rates in other jurisdictions			0.27%				(6.99%	)
Tax effect of non-deductible entertainment			0.05%				–
Changes in valuation allowance			0.55%				(18.01%	)
Effective tax rate			25.87%				–

3) Deferred tax liabilities, net

The tax effects of temporary differences representing deferred income tax assets result principally from the following:

		December 31, 2018				December 31, 2017
		$				$
Deferred tax assets
Tax loss carried forward			743				716
Allowance for doubtful receivables			6,824				–
			7,567				716
Valuation allowance			(7,567	)			(716	)
Total deferred tax assets, net			–				–

Deferred tax liabilities
Property and equipment, difference in depreciation			(14,676	)			–

Deferred tax liabilities, net			(14,676	)			–

As of December 31, 2018 and 2017, the Company had operating loss carry-forwards of $5,000 and $4,225, respectively. The valuation allowance was provided against deferred tax assets in entities where it was determined, it was more likely than not that the benefits of the deferred tax assets will not be realized. The Company had deferred tax assets which generated from tax loss carry-forwards, which can be carried forward to offset future taxable income and allowance for receivables. The management determines it is more likely than not that part of deferred tax assets could not be utilized, so allowance was provided as of December 31, 2018 and 2017.

PRC Withholding Tax on Dividends

The current PRC Enterprise Income Tax Law imposes a 10% withholding income tax for dividends distributed by foreign-invested enterprises to their immediate holding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy certain requirements specified by PRC tax authorities, for example, will be subject to a 5% withholding tax rate.

As of December 31, 2018 and 2017, the Company had not recorded any withholding tax on the retained earnings of its foreign-invested enterprises in the PRC, since the Company intends to reinvest its earnings to further expand its business in mainland China, and its foreign-invested enterprises do not intend to declare dividends to their immediate foreign holding companies.