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Taxes
 6 Months Ended
Jun. 30, 2025
Taxes [Abstract]  
TAXES

15. TAXES

 

Income tax

 

BVI

 

The Company and Cre8 Investments Limited is incorporated in the BVI and is not subject to tax on income or capital gains under current BVI laws. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.

 

Hong Kong

 

Cre8 Hong Kong is incorporated in Hong Kong and subject to Hong Kong Profits Tax on the taxable income as reported in its statutory consolidated financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong. From year of assessment of 2019/2020 onwards, Hong Kong profits tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. Under Hong Kong tax laws, Cre8 Hong Kong is exempted from income tax on its foreign-derived income, and there are no withholding taxes in Hong Kong on remittance of dividends.

 

PRC

 

Chuangbafang is governed by the income tax laws of the PRC. Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for all domestic enterprises and foreign invested enterprises is 25%. In January 2019, the State Administration of Taxation provides a preferential corporate income tax rate of 20% and an exemption ranged from 50% to 75% in the assessable taxable profits for entities qualified as small-size enterprises (the exemption range has been changed to from 50% to 87.5% for the period from January 1, 2021 to December 31, 2023, then the exemption range has been changed to from 75% to 87.5% for the period from January 1, 2023 to December 31, 2024). The policy is effective for the period from January 1, 2019 to December 31, 2024.

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

 

   For the six-month periods ended June 30, 
   2024   2025   2025 
   HK$   HK$   US$ 
Hong Kong profit tax            
Current tax expenses   
—
    1,539,646    196,136 
Deferred tax expenses   1,217,295    89,670    11,424 
Total   1,217,295    1,629,316    207,560 

 

The Company’s effective tax rates were as follows:

 

   For the six-month periods ended
June 30,		 
   2024   2025 
Income tax rate in the BVI, permanent tax holiday   0%   0%
Hong Kong statutory income tax rate   16.5%   16.5%
Effect of different tax rates available to different jurisdictions   
—
    
—
 
Effect of non-taxable income   0.2%   
—
 
Effect of non-deductible expense   
—
    (0.6)%
Effect of tax loss not recognized   3.2%   
—
 
Effect of valuation allowance   
—
    (1.5)%
Effective tax rate   19.9%   14.4%

 

Deferred tax

 

The deferred tax assets which are principally comprised of acceleration of depreciation on property and equipment, allowance for expected credit losses, provision for employee benefits and net operating losses. Significant components of deferred tax were as follows:

 

   Acceleration of
depreciation on
property and
equipment		   Allowance
for
expected
credit
losses		   Provision
for
employee
benefits		   Tax losses   Total 
   HK$   HK$   HK$   HK$   HK$ 
Balance as of January 1, 2024   869,259    
—
    
—
    1,201,373    2,070,632 
Recognized in the income statement   (56,920)   
—
    
—
    (1,160,375)   (1,217,295)
Exchange difference   
—
    
—
    
—
    
—
    
—
 
Less: valuation allowance   
—
    
—
    
—
    
—
    
—
 
Balance as of June 30, 2024   812,339    
—
    
—
    40,998    853,337 

 

   Acceleration of
depreciation on
property and
equipment		   Allowance
for
expected
credit
losses		   Provision
for
employee
benefits		   Tax losses   Total   Total 
   HK$   HK$   HK$   HK$   HK$   US$ 
Balance as of January 1, 2025   826,338    197,559    (173,716)   
—
    850,181    109,452 
Recognized in the income statement   (143,738)   (123,997)   178,065    
—
    (89,670)   (11,424)
Exchange difference   
—
    
—
    
—
    
—
    
—
    (1,145)
Less: valuation allowance   
—
    
—
    
—
    
—
    
—
    
—
 
Balance as of June 30, 2025   682,600    73,562    4,349    
—
    760,511    96,883 

 

The Company had nil losses carried forward as of December 31, 2024 and June 30, 2025, respectively, expected future tax benefit to be derived from these tax losses, property and equipment have been recognized. The Company did not recognize any valuation allowance against its deferred tax assets as management believes the Company will be able to fully utilize the assets in the foreseeable future.