INCOME TAX EXPENSE

12 Months Ended

Dec. 31, 2023

Notes and other explanatory information [abstract]

INCOME TAX EXPENSE

7. INCOME TAX EXPENSE

The Company is incorporated in the BVI and conducts its primary business operations through its subsidiaries in the PRC. It also has intermediate holding companies in the BVI and Hong Kong. Under the current laws of the BVI, the Company and its subsidiaries incorporated in the BVI are not subject to tax on income or capital gains. The Hong Kong Profits Tax rate is 16.50%. The Company’s Hong Kong subsidiaries have both Hong Kong–sourced and non-Hong Kong–sourced income. The latter is not subject to Hong Kong Profits Tax and the related expenses are non-tax-deductible. For the Hong Kong–sourced income, no provision for Hong Kong Profits Tax was made as such operations sustained tax losses during the years ended December 31, 2021, 2022 and 2023. Furthermore, there are no withholding taxes in Hong Kong on the remittance of dividends.

China

Under the law of the PRC on corporate income tax and the Implementation Regulation of the Corporate Income Tax Law (collectively, the “CIT Law”), the Company’s PRC subsidiaries are generally subject to PRC corporate income tax at the statutory rate of 25% on their respective estimated assessable profits for the years ended December 31, 2021, 2022 and 2023.

Under the prevailing CIT Law and its relevant regulations, any dividends paid by the Company’s PRC subsidiaries from their earnings derived after January 1, 2008 to the Company’s Hong Kong subsidiaries are subject to PRC dividend withholding tax of 5% or 10%, depending on the applicability of the Sino-Hong Kong tax treaty.

The current and deferred components of income tax benefit are as follows:

	Year Ended December 31,
	2021			2022		2023		2023
	CNY			CNY		CNY		US$
Current income tax expense		—			—		—		—
Deferred income tax benefit		(5,095	)		—		—		—
Total tax credit for the year from continuing operations		(5,095	)		—		—		—
Total tax charge for the year from a discontinued operation		7,230			5,864		1,931		272
Total		2,135			5,864		1,931		272

(Loss)/profit before income tax from continuing and discontinued operations consists of the following:

	Year Ended December 31,
	2021			2022			2023			2023
	CNY			CNY			CNY			US$
PRC		(4,669	)		6,406			(1,718	)		(243	)
BVI		(48,106	)		(22,776	)		(8,738	)		(1,233	)
Hong Kong		(61	)		(62	)		(56	)		(8	)
Total loss before income tax for the year		(52,836	)		(16,432	)		(10,512	)		(1,484	)

A reconciliation of the income taxes from continuing and discontinued operations computed at the PRC statutory tax rate of 25% to the actual income tax expense is as follows:

	Year Ended December 31,
	2021			2022			2023			2023
	CNY			CNY			CNY			US$
Loss before income tax for the year from continuing operations		(48,979	)		(23,338	)		(8,337	)		(1,177	)
(Loss)/profit before income tax for the year from a discontinued operation		(3,857	)		6,906			(2,175	)		(307	)
Total		(52,836	)		(16,432	)		(10,512	)		(1,484	)
Tax at the statutory tax rate		25	%		25	%		25	%		25	%
Computed income tax benefit		(13,209	)		(4,108	)		(2,628	)		(371	)
Effect of different tax rates of the Company and certain subsidiaries		6,937			5,699			2,190			309
Tax losses with no deferred tax assets recognized		1,770			420			290			41
Non-deductible expenses		122			983			617			87
Statutory income		—			(201	)		—			—
Deductible temporary differences with no deferred tax assets recognized		—			971			2,430			343
Utilization of previously unrecognized deductible temporary differences and tax losses		(150	)		(1,774	)		(2,021	)		(286	)
Write-off of unrecoverable deferred tax assets previously recognized		2,987			2,272			—			—
Preferential tax rate		2,215			14			95			13
Others		1,463			1,588			958			136
Total tax credit for the year from continuing operations		(5,095	)		—			—			—
Total tax charge for the year from a discontinued operation		7,230			5,864			1,931			272
Income tax benefit		2,135			5,864			1,931			272