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Deferred Tax, Net

12 Months Ended

Dec. 31, 2022

7. DEFERRED TAX, NET

Deferred tax assets resulted from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with US GAAP; interest income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not meet revenue recognition in accordance with US GAAP; accrued employee social insurance that can be deducted for tax purposes in the future, and the difference between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part of cost of systems in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net investment in sales-type leases.

As of December 31, 2022 and 2021, deferred tax assets consisted of the following:

	2022			2021
Accrued expenses	$	57,611		$	61,301
Write-off Erdos TCH net investment in sales-type leases *		4,579,725			6,299,343
Impairment loss of Xi’an TCH’s investment into the HYREF fund		2,692,186			2,940,854
US NOL		730,855			463,508
PRC NOL		9,118,123			10,189,545
Total deferred tax assets		17,178,500			19,954,551
Less: valuation allowance for deferred tax assets		(17,178,500	)		(19,954,551	)
Deferred tax assets, net	$	-		$	-

*	This represents the tax basis of Erdos TCH investment in sales type leases, which was written off under US GAAP upon modification of lease terms, which made the lease payments contingent upon generation of electricity.