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INCOME TAX
9 Months Ended
Mar. 31, 2023
INCOME TAX  
INCOME TAX

NOTE 15 - INCOME TAX

 

For the nine months ended March 31, 2023 and 2022, the local (“United States of America”) and foreign components incurred loss before income taxes as follows:

 

 

 

Nine Months ended March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Tax jurisdiction from:

 

 

 

 

 

 

- Local (US regime)

 

$(3,344,881 )

 

$(2,608,660 )

- Foreign, including

 

 

 

 

 

 

 

 

British Virgin Island

 

 

(338,002 )

 

 

-

 

Malaysia

 

 

(375,897 )

 

 

(112,901 )

Labuan, Malaysia

 

 

(8,935 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

$(4,067,715 )

 

$(2,721,561 )

 

The provision for income taxes consisted of the following:

 

 

 

Nine Months ended March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Current tax:

 

 

 

 

 

 

- Local

 

$-

 

 

$-

 

- Foreign

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

 

 

 

- Local

 

 

-

 

 

 

-

 

- Foreign

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

$-

 

 

$-

 

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company mainly operates in U.S.A. and Malaysia and are subject to taxes in the jurisdictions in which they operate, as follows:

 

United States of America

 

VRDR, VRI and VLI are subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented.

 

The Company has provided for a full valuation allowance against the deferred tax assets of $962,630 on the expected future tax benefits from the net operating loss (“NOL”) carry forwards of $4,583,951 as the management believes it is more likely than not that these assets will not be realized in the future.

Net Operating Losses (NOLs) generated prior to January 1, 2018 are able to be carried forward up to twenty subsequent years. Any NOLs created for tax years subsequent to that may be carried forward indefinitely.  However, any NOLs arising from tax years ending after December 31, 2020, can only be used to offset up to 80% of taxable income.

 

For the nine months ended March 31, 2023 and 2022, there were no operating income under US tax regime.

 

BVI

 

Under the current BVI law, VRAP is not subject to tax on income.

 

Labuan

 

Under the current laws of the Labuan applicable to BRL, income derived from an intellectual property right is subject to tax under the Malaysian Income Tax Act 1967 (ITA) at 24% of its chargeable income. However, BRL is not subject to income tax, given that it was a net loss position during the current period presented.  The losses are presently not able to be carried forward to offset against its future operation income as income generating activities have not yet been undertaken.

 

Malaysia

 

VRSB, Champmark and Wision are registered in Malaysia and are subject to the Malaysian corporate income tax at a standard income tax rate of 24% on chargeable income.

 

For the nine months ended March 31, 2023, the operation in Malaysia incurred $5,750,759 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss are allowed to be carried forward up to a maximum of ten (10) years of assessments under the current tax legislation in Malaysia. The Company has provided for a full valuation allowance against the deferred tax assets of $1,380,182 on the expected future tax benefits from the net operating loss (“NOL”) carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

 

 

Nine Months ended

March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Loss before income taxes

 

$(375,897 )

 

$(112,901 )

Statutory income tax rate

 

 

24%

 

 

24%

Income tax expense at statutory rate

 

 

(90,215 )

 

 

(27,096 )

Non-deductible items

 

 

9,850

 

 

 

3,781

 

Operating losses unable to carried forward

 

 

2,144

 

 

 

-

 

Net operating loss

 

 

78,221

 

 

 

23,315

 

Income tax expense

 

$-

 

 

$-

 

 

The following table sets forth the significant components of the deferred tax assets of the Company:

 

 

 

March 31, 2023

 

 

June 30, 2022

 

 

 

 

 

 

 

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards, from

 

 

 

 

 

 

US tax regime

 

$962,630

 

 

$169,688

 

Malaysia tax regime

 

 

1,380,182

 

 

 

1,259,662

 

Less: valuation allowance

 

 

(2,342,812 )

 

 

(1,429,350 )

Deferred tax assets, net

 

$-

 

 

$-

 

 

The Company has recorded valuation allowances for certain tax attribute carry forwards and other deferred tax assets due to uncertainty that exists regarding future realizability. If in the future the Company believes that it is more likely than not that these deferred tax benefits will be realized, the majority of the valuation allowances will be reversed in the unaudited condensed consolidated statement of operations. The Company did not have any interest and penalty provided or recognized in the income statements for the nine months ended March 31, 2023 and 2022. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.