INCOME TAXES

12 Months Ended

Aug. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

12. INCOME TAXES

For the years ended August 31, 2021 and 2020, the local (United States) and foreign components of loss before income tax were comprised of the following:

	Year ended August 31,
	2021			2020
Tax jurisdictions from:
- Local	$	(5,200,428	)	$	(6,387,031	)
- Foreign, representing
Seychelles		(1,610	)		(1,603	)
British Virgin Islands		(89,403	)		-
Taiwan		(3,077,725	)		76,245
PRC		(594,153	)		-
Hong Kong		(2,768,311	)		(3,530,440	)
Loss before income tax	$	(11,731,630	)	$	(9,842,829	)

The components of the provision for income taxes benefits are:

	Year ended August 31,
	2021			2020
Current	$	-		$	-
Deferred		(38,138	)		-
Total income tax benefits	$	(38,138	)	$	-

The provision for income taxes consisted of the following:

	Year ended August 31,
	2021			2020
Loss before income taxes	$	(11,731,630	)	$	(9,842,829	)
Statutory income tax rate		21	%		21	%
Income tax credit computed at statutory income rate		(2,463,642	)		(2,066,994	)
Reconciling items:
Non-deductible expenses		413,599			1,980
Share-based payments		1,378,279			1,693,125
Tax effect of tax exempt entity		19,113			337
Rate differential in different tax jurisdictions		18,838			158,107
Valuation allowance on deferred tax assets		595,675			213,445
Income tax benefits	$	(38,138	)	$	-

United States of America  

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of August 31, 2021, the operations in the United States of America incurred $2,237,348 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2037, if unutilized. As of August 31, 2021 and 2020, the Company has provided for a full valuation allowance of $469,843 and $339,334, respectively, against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

Seychelles

Under the current laws of the Seychelles, LFG is registered as an international business company which governs by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.

British Virgin Islands

NPI is tax exempted in the British Virgin Islands where it was incorporated.

Taiwan  

LOC is subject to corporate income tax (“CIT”) in Taiwan. With effect from January 1, 2018, the CIT rate in Taiwan is 20%. However, for profit-seeking entities with less than NT$ 500,000 (approximately $16,000) in taxable income, the CIT rate is 18% in 2018, 19% in 2019, and 20% since 2020 if taxable income exceeds NT$120,000 (approximately $3,900). As of August 31, 2021, LOC had net operating loss carry-forwards in Taiwan of $3,090,707, which will expire in various years through 2025. The Company has provided for a full valuation allowance of $618,141 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

PRC

BJDC is subject to corporate income tax (“CIT”) at 25% in accordance with the relevant tax laws and regulations of the PRC. As of August 31, 2021, BJDC had net operating loss carry-forwards in the PRC of $1,831,208, which will expire in various years through 2028. The Company has provided for a full valuation allowance of $457,802 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

Hong Kong

JFB is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income. No provision for Hong Kong profits tax has been made in the financial statements as JFB has no assessable profits for the years. As of August 31, 2021, the operations in Hong Kong incurred $2,843,554 of cumulative net operating losses (NOL’s) which can be carried forward indefinitely to offset future taxable income. As of August 31, 2021 and 2020, the Company has provided for a full valuation allowance of approximately $469,186 and $357,545, respectively, against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of August 31, 2021 and 2020 are presented below:

	As of August 31,
	2021			2020
Deferred tax assets:
Net operating loss carryforwards
– United States of America	$	(469,843	)	$	(339,334	)
– Taiwan		(618,141	)		(81,803	)
– PRC		(457,802	)		(309,264	)
– Hong Kong		(469,186	)		(357,545	)
Less: valuation allowance		2,014,972			1,087,946
	$	-		$	-
Deferred tax liabilities:
Intangible assets- Technical know-hows	$	125,502		$	163,640