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Taxes
 12 Months Ended
Dec. 31, 2025
Taxes [Abstract]  
TAXES

Note 14 - TAXES

 

(a) Income taxes

 

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

 

Cayman Islands

 

Under the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

 

British Virgin Islands

 

Under the current laws of the BVI, an entity incorporated in the BVI are not subject to tax on income or capital gains.

 

Hong Kong

 

In accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. KingWin HK 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. In Hong Kong, the applicable tax rate is 16.5% for companies whose net profit exceeds 2 million HKD in a fiscal year. For companies with a net profit of less than 2 million HKD, an income tax rate of 8.25% applies. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Under Hong Kong tax law, KingWin HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.

 

PRC

 

The Company is subject to PRC Enterprise Income Tax Laws (“EIT Laws”) with the statutory income tax rate of 25 % with the following exceptions for the years ended December 31, 2025, 2024 and 2023.

 

On January 17, 2019, the State Taxation Administration issues the notice on the scope of small-scale and low-profit corporate income tax preferential policies of the Ministry of Finance and the State Administration of Taxation, 2019 No. 13 for small-scale and low-profit enterprises whose annual taxable income is less than RMB 1,000,000 (including RMB1,000,000), their income is reduced by 25% to the taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 5%. While the portion of annual taxable income exceeding RMB 1,000,000, but not more than RMB 3,000,000, which is essentially resulting in a favorable income tax rate of 10%. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. Tiancheng Jinhui was eligible to enjoy a preferential tax rate of 10% for the year ended December 31, 2025.

Significant components of the income tax expense (benefit) consisted of the following for the years ended December 31, 2025, 2024 and 2023:

 

   For the
Year Ended
December 31,
2025		   For the
Year Ended
December 31,
2024		   For the
Year Ended
December 31,
2023		 
Current income tax expenses (benefit)            
PRC  $
                -
   $187,706    
-
 
Hong Kong   
-
    
-
    
-
 
Others   
-
    
-
    
-
 
Deferred income tax expenses (benefit)               
PRC   
-
    
-
    115,094 
Hong Kong   
-
    
-
    
-
 
Others   
-
    
-
    
-
 
Total income tax from continuing operations   
-
    187,706    115,094 
Current income tax (benefit) expenses             - 
PRC   
-
    (133,175)   (62 
Hong Kong        
-
    
-
 
Others        
-
    
-
 
Deferred income tax (benefit) expenses               
PRC   
-
    
-
    (1)
Hong Kong   
-
    
-
    
-
 
Others   
-
    
-
    
-
 
Total income tax from discontinued operations   
-
    (133,175)   (63)
Total income tax expenses (benefit)  $
-
   $54,531    115,031

 

(Loss) income before income taxes is attributable to the following geographic locations for the years ended December 31,2025, 2024 and 2023:

 

   For the Year
Ended
December 31,
2025		   For the Year
Ended
December 31,
2024		   For the Year
Ended
December 31,
2023		 
Cayman Islands  $      (4,224,727)  $      (3,091,010)   (1,531,561)
BVI   (4,610)   (4,201)   (2,104)
Hong Kong   (4,483)   (14,469)   (1,708)
PRC   (20,054,222)   (1,090,839)   (901,830)
US   267,325    
-
    
-
 
Less: intercompany transactions   
-
    3,891,541    
-
 
Total (Loss) / Income before Income Taxes from continuing operations   (24,020,717)   (8,092,060)   (2,437,203)
Cayman Islands   
-
    
-
    
-
 
BVI   
-
    
-
    
-
 
Hong Kong   
-
    
-
    
-
 
PRC   
-
    (532,698)   4,568 
Less: intercompany transactions   
-
    
-
    
-
 
Total (Loss) / Income before Income Taxes from discontinued operations   
-
    (532,698)   4,568 
Total (Loss) / Income before Income Taxes  $(24,020,717)  $(8,624,758)   (2,432,637)

The following table presents a reconciliation of the differences between the statutory income tax and the Company’s effective income tax for the years ended December 31, 2025, 2024 and 2023:

 

   For the Year Ended December 31,
2025		   For the Year Ended December 31,
2024		   For the Year Ended December 31, 2023 
   %   %   % 
Net loss before income tax  $   (24,020,717)  $     (8,092,060)   (2,437,205)
Statutory income tax rate of the PRC   25%   25%   25%
Income tax computed at PRC tax rate from continuing operations   (6,005,179)   (2,023,015)   (609,301)
                
Net (loss) / income before income tax  $-   $(532,698)   4,568 
Statutory income tax rate of the PRC   25%   25%   25%
Income tax computed at PRC tax rate from discontinued operations   -    (133,175)   1,142 
Total income tax computed at PRC tax rate   (6,005,179)   (2,156,190)   (608,159)
                
Reconciling items               
                
Effect of different tax rates of subsidiary operating in other jurisdiction   2,195,509    1,582,100    383,710 
Non-deductible (benefit) expenses   591    (432)   3,560 
Utilization of prior year losses   (6,976)   -    - 
Effect of deductible temporary differences or deductible losses for which no deferred tax assets are recognized for the year   3,816,055    629,053    337,125 
Income tax expenses (benefit) from continuing operations   -    187,706    115,094 
                
Effective tax rate from continuing operations   -%   (2.3)%   (4.7)%
                
Effect of different tax rates of subsidiary operating in other jurisdiction   -    (8,388)   - 
Non-deductible expenses (benefit)        -    - 
Effect of deductible temporary differences or deductible losses for which no deferred tax assets are recognized for the year   -    8,388    (1,205)
Income tax (benefit) expenses from discontinued operations   -    (133,175)   (63)
                
Effective tax rate from discontinued operations   -%   25%   (1.4)
Total effective tax rate   -%   (0.6)%   4.7%

 

Tax payable as of December 31, 2025 and 2024:

 

  

As of

December 31,
2025

  

As of

December 31,
2024

 
Value added tax payable  $8,954   $11,333 
Income tax receivable   
-
    
-
 
Other tax payable   2,392    3,325 
Total taxes payable from continuing operations   11,346    14,658 
Value added tax payable   
-
    1,577 
Income tax receivable   
-
    (12)
Other tax payable   
-
    227 
Total taxes payable from discontinued operations   
-
    1,792 
Total taxes payable  $11,346   $16,450 

Net Operating Loss Carry Forward:

 

Location  As of
December 31,
2025		   As of
December 31,
2024		 
PRC*  $22,770,488   $2,688,670 
BVI   4,610    4,201 
Cayman   4,224,727    3,091,010 
Hong Kong*   20,732    16,249 
Total NOL Carryforwards from continuing operations   27,020,557       5,800,130 
PRC*   
-
    532,698 
BVI   
-
    
-
 
Cayman   
-
    
-
 
Hong Kong*   
-
    
-
 
Total NOL Carryforwards from discontinued operations   
-
    532,698 

 

*The net operating loss of the PRC subsidiary incurred in the amount of $2,688,670 for the year 2024 will expire if unused by December 31, 2028. Additionally, the net operating loss of $27,020,557 incurred by the PRC subsidiary will expire if unused by December 31, 2029.

 

  Companies incorporated in the Cayman Islands and the British Virgin Islands (BVI) are not subject to corporate income tax obligations.

 

* Losses made in an accounting year are to be carried forward and set off against future profits of that trade but a corporation carrying on more than one trade may have losses in one trade offset against profits of the other. For gains or losses which are subject to concessionary tax rate, there are special provisions on the adjustment of losses between concessionary trading activities and normal trading activities.

 

(c) Uncertain tax positions

 

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 years ended December 31, 2025, 2024 and 2023, the Company had no unrecognized tax benefits.

 

(d) Value added tax

 

The Company is subject to VAT and related surcharges in China for providing member services and other in-depth services. The applicable VAT rate is 6% for general taxpayers. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of services provided (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). VAT liability is recorded in the line item of accrued expenses and other current liabilities on the consolidated balance sheets. Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued.

 

According to the Article 18 of the “Enterprise Income Tax Law”: Losses incurred in the tax year of an enterprise may be carried forward to subsequent years and offset against the income of those years. However, the maximum duration for carrying forward the losses shall not exceed five years.

 

And according to the Announcement No. 19 of 2023 issued by the Ministry of Finance and State Administration of Taxation, for small-scale VAT taxpayers, the taxable sales revenue subject to a 3% collection rate will be levied at a reduced rate of 1% until December 31, 2027.