Cayman Island

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Upon payment of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.

Samoa

Under the current laws of Samoa, GreenTree Samoa is not subject to tax on income or capital gain. Upon payment of dividends by the Company to its shareholders, no Samoa withholding tax will be imposed.

Hong Kong

Subsidiaries in Hong Kong are subject to Hong Kong profit tax at a rate of 16.5%, and foreign-derived income is exempted from income tax. There are no withholding taxes upon payment of dividends by the subsidiaries incorporated in Hong Kong to their shareholders.

Mainland China

On March 16, 2007, the PRC government promulgated the Law of the People’s Republic of China on Enterprise Income Tax (“New EIT Law”), which was effective from January 1, 2008. Under the New EIT Law, domestically-owned enterprises and foreign-invested enterprises are subject to a statutory tax rate of 25%. Enterprises qualified as “High New Technology Enterprises (“HNTEs”) enjoy a preferential income tax rate of 15%. Dividends, interest, rent or royalties and proceeds from any such assets located in the PRC (after deducting the net value of such assets) shall be subject to a 10% withholding tax.

Shanghai Evergreen and Shanghai Sipei are recognized as qualified HNTEs for the periods from 2023 to 2025 and enjoy a preferential tax rate of 15%.

(Loss) Income before income taxes and share of losses in equity method investments consists of:

The current and deferred components of income tax expense appearing in the consolidated statements of comprehensive income (loss) are as follows:

Reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: 

The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2022, 2023 and 2024 are as follows:

As of December 31, 2024, the Group had tax losses carryforwards of RMB502,614,634 (USD68,857,923), mainly deriving from the entities in the PRC. The tax losses in the PRC can be carried forward for five years to offset future taxable profit and which will expire between 2025 and 2029 if not utilized.

For the year ended December 31, 2024, the Group paid withholding tax of RMB11,349,180 (USD1,554,831) for the remittance of earnings from subsidiaries in the PRC to offshore entities. As of December 31, 2024, the Group has accrued RMB33,595,045 (USD4,602,503) deferred tax liabilities related to undistributed earnings from PRC subsidiaries. As of December 31, 2024, the taxable temporary differences for unrecognized deferred tax liabilities related to investments in foreign subsidiaries were RMB906,737,961 (USD124,222,591). The amount of unrecognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries is not determined because such a determination is not practicable.

Below is a tabular roll-forward of the Group’s unrecognized tax benefits.

It is possible that the amount of uncertain tax benefits will change in the next 12 months, however, an estimate of the range of the possible outcomes cannot be made at this time.RMB316,421,543 (USD43,349,574) of the uncertain tax positions, if ultimately recognized, would affect the effective tax rate.

The Group’s subsidiaries in mainland China are subject to examination by the tax authorities for tax years 2019 through 2024 on non-transfer pricing matters and from 2014 through 2024 on transfer pricing matters.