v3.25.2
Income Taxes
 12 Months Ended
Sep. 30, 2024
Income Taxes [Abstract]  
INCOME TAXES

15. INCOME TAXES

 

Cayman Islands

 

Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

 

Hong Kong

 

According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, from April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for qualified corporations, and assessable profits above HK$2,000,000 will be taxed at 16.5%. The assessable profits of corporations which is not qualifying for the two-tiered profits tax rates regime, will continue to be taxed at a flat rate of 16.5%.

 

PRC

 

Under the Enterprise Income Tax Laws of the PRC, or the EIT Laws, domestic enterprises and Foreign Investment Enterprises, or the FIEs, are usually subject to a unified 25% enterprise income tax rate, while preferential tax rates, tax holidays and tax exemption may be granted on case-by-case basis.

 

Japan

 

Japan has a progressive tax system, of which its corporate income tax is calculated on the estimated assessable profits for the years ended September 30, 2024, 2023 and 2022 times applicable tax rates. EXTEND is subject to national corporate income tax, inhabitant tax, and enterprise tax in Japan, which in the aggregate, resulted in the statutory income tax rate of approximately 36.8%, 36.8% and 37.1% for the years ended September 30, 2024, 2023 and 2022, respectively.

 

The effective income tax rate was approximately 392.22%, 8.92% and 26.58% for the years ended September 30, 2024, 2023 and 2022, respectively.

 

The income tax expenses consist of the following components:

 

   For the years ended
September 30,		 
   2024   2023   2022 
Current income tax expenses  $441,441   $96,452   $305,439 
Deferred income tax expenses/(benefit)   148,239    (160,402)   80,519 
Total income tax expenses/(benefit)  $589,680   $(63,950)  $385,958 

 

A reconciliation between the Group’s actual provision for income taxes and the provision at Japan statutory rate is as follows:

 

       For the years ended
September 30,		 
       2024   2023   2022 
Profit/(loss) before income tax expenses       $150,344   $(716,678)  $1,452,333 
Computed income tax expense/(benefit) with statutory tax rate(1)   36.8%   55,367    (263,930)   538,344 
Effect of preferential tax rate        (21,092)   (22,301)   (29,148)
Impact of different tax rates in other jurisdictions        (237,513)   (425)   (303,869)
Non-deductible expenses        3,160    316    1,372 
Utilized tax loss        
-
    (49,313)   
-
 
Changes in valuation allowance        789,758    271,703    179,259 
Income tax expenses/(benefit)       $589,680   $(63,950)  $385,958 

 

(1)Since the company’s main place of business is in Japan, the Japanese tax rate has been chosen as the statutory tax rate.

As of September 30, 2024 and 2023, the significant components of the deferred tax assets are summarized below:

 

   As of September 30, 
   2024   2023 
Deferred tax assets:        
Net operating loss carried forward  $1,265,023   $654,588 
Unrealized foreign exchange gain/(loss)   45,440    (36,521)
Total deferred tax assets   1,310,463    618,067 
Valuation allowance   (1,310,463)   (468,938)
Deferred tax assets, net of valuation allowance  $
-
   $149,129 

 

The Group operates through subsidiaries and valuation allowance is considered for each of the entities on an individual basis. The Group recorded valuation allowance against deferred tax assets of those entities that are in a cumulative financial loss position and are not forecasting profits in the near future as of September 30, 2024 and 2023. In making such determination, the Group also evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods. The Group has recognized a valuation allowance of $1,310,463 and $468,938 for the years ended September 30, 2024 and 2023, respectively.

 

Changes in valuation allowance are as follows:

 

   As of September 30 
   2024   2023 
Valuation allowance:          
Balance at beginning of the year  $468,938   $211,556 
Additions   790,396    271,702 
Loss utilized   
-
    (49,314)
Exchange difference   51,129    34,994 
Balance at end of the year  $1,310,463   $468,938 

 

As of September 30, 2024, net operating loss carryforwards will expire, if unused, in the following amounts:

 

2025  $
-
 
2026   142,260 
2027   500,178 
2028   1,602,758 
2029   1,688,526 
Total  $3,933,722