INCOME TAX EXPENSES (Tables)
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12 Months Ended |
Dec. 31, 2022 |
INCOME TAX EXPENSES |
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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 |
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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. |
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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 |
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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 |
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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 |
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