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INCOME TAX EXPENSES (Tables)
12 Months Ended
Dec. 31, 2022
INCOME TAX EXPENSES  
Schedule of current and deferred components of income taxes

The current and deferred components of income taxes appearing in the consolidated statements of comprehensive income are as follows:

Year ended December 31, 

    

2020

    

2021

    

2022

RMB

RMB

RMB

Current tax expenses

 

44,813

 

26,854

 

(4,470)

Deferred tax (benefit) expense

 

(1,492)

 

(21,115)

 

22,644

Income tax expenses

 

43,321

 

5,739

 

18,174

Schedule of reconciliation between income tax expenses computed by applying PRC enterprise tax rate before income taxes and actual provision

Reconciliation between the income tax expenses computed by applying the PRC enterprise tax rate to income before income taxes and actual provision were as follows:

Year ended December 31, 

2020

2021

2022

    

RMB

    

RMB

    

RMB

Income (loss) from operations in the PRC

 

200,941

 

89,126

 

(272,186)

Income from overseas entities

 

16,826

 

5,504

 

7,730

Income (loss) before income tax

 

217,767

 

94,630

 

(264,456)

Tax expense (benefit) at PRC enterprise income tax rate of 25%

54,442

 

23,658

 

(66,114)

Income tax on tax holiday(1)

 

(31,074)

 

(16,872)

 

6,310

Tax effect of permanent differences(2)

 

(16,895)

 

(28,303)

 

(30,550)

Change in valuation allowance(3)

 

29,780

 

22,153

 

107,603

Effect of share-based compensation

 

10,830

 

7,111

 

2,934

Effect of income tax in jurisdictions other than the PRC

 

(3,762)

 

(2,008)

 

(2,009)

Income tax expenses

 

43,321

 

5,739

 

18,174

(1)The income tax on tax holidays represents the effect of preferential income tax rate enjoyed by Foshan Viomi, Guangdong Lizi and Yunmi Hulian. Foshan Viomi was qualified as an HNTE and enjoyed the beneficial tax rate of 15% for the three years ended December 31, 2020, 2021 and 2022. Foshan Viomi applied for HNTE qualification renewal in 2022, and obtained approval in December 2022. Guangdong Lizi applied for the HNTE qualification and obtained approval in December 2020. It entitled to enjoy the preferential tax rate of 15% as an HNTE for three years starting from 2020 and should apply for HNTE qualification renewal in 2023. Yunmi Hulian applied for the HNTE qualification and obtained approval in December 2021. It is entitled to enjoy the preferential tax rate of 15% as an HNTE for three years starting from 2021 and should apply for HNTE qualification renewal in 2024.
(2)The permanent book-tax differences mainly consisted of R&D super deductions.
(3)Valuation allowance is provided against deferred tax assets when the Group determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Group considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. Valuation allowance for the years ended December 31, 2020, 2021 and 2022 were provided for net operating loss carry forward of certain group entities which reported loss because it was more likely than not that such deferred tax assets would not be realized based on the Group’s estimate of their future taxable income. If events occur in the future that allow the Group to realize more of its deferred income tax than the presently recorded amounts, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur.
Schedule of per share effect of tax holidays

The per share effect of the tax holidays are as follows:

Year ended December 31, 

    

2020

    

2021

    

2022

RMB

RMB

RMB

Net income per share effect – basic

 

0.14

 

0.02

 

0.06

Net income per share effect – diluted

 

0.13

 

0.02

 

0.06

Schedule of significant components of deferred tax assets

The significant components of the Group’s deferred tax assets were as follows:

As of December 31, 

2021

2022

    

RMB

    

RMB

Accrued expenses and others

 

18,567

 

21,935

Net operating loss carry forwards

 

69,852

 

151,463

Inventories write downs

 

985

 

1,040

Deferred income

 

161

 

86

Total deferred tax assets

 

89,565

 

174,524

Less: valuation allowance

 

(54,261)

 

(161,864)

Deferred tax assets, net

 

35,304

 

12,660

Schedule of movement of valuation allowance

Year ended December 31, 

2020

2021

2022

    

RMB

    

RMB

    

RMB

Balance at beginning of the year

 

3,146

 

32,926

 

54,261

Provided

 

29,780

 

21,335

 

107,603

Balance at end of the year

 

32,926

 

54,261

 

161,864