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INCOME TAXES
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

8. INCOME TAXES

 

The Company being a United States entity is subject to the United States federal income tax at 21%. No provision for income taxes in the United States has been made as the Company had no United States taxable income for the six months ended June 30, 2025.

 

YCQH Holding Limited was incorporated in the Republic of Seychelles and, under the laws of Seychelles, is not subject to income taxes.

 

YCQH Agricultural Technology Co. Limited was incorporated in Hong Kong and is subject to Hong Kong income tax at a tax rate of 16.5%. The first HK$ 2 million (equivalent US$ 258,000) of profits earned by the company will be taxed at half the current tax rate (i.e., 8.25%) whilst the remaining profits will continue to be taxed at the existing 16.5% tax rate.

 

YCWB Agricultural Technology Co. Limited and SCQC Agriculture Co. Limited were incorporated in the PRC and subject to the company income tax rate of 25%. On top of company tax, PRC domestic sales are subjected to Value Added Tax typically at 3% for a Small-Scale Taxpayer with PRC revenue less than CNY 5,000,000, which is levied on the invoiced value of sales and is payable by the purchaser for agricultural related product. YCWB Agricultural Technology Co. Limited enjoyed preferential VAT rate of 1%. The Company is required to remit the VAT it collects to the tax authority. A credit is available whereby VAT paid on purchases can be used to offset the VAT due on sales.

 

Effective and Statutory Rate Reconciliation

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates.

 

The following table summarizes a reconciliation of the Company’s income taxes expenses:

 

   2025   2024 
   For the Six Months Ended June 30 
   2025   2024 
Computed expected expenses/(benefits)   25%   25%
Effect of foreign tax rate difference   -1%   1%
Deferred tax assets not recognized   -24%   30%
Temporary difference not recognized   -    (46)%
Income tax expense   -    10%

 

   2025   2024 
   For the Six Months Ended June 30 
   2025   2024 
PRC statutory tax rate   25%   25%
Computed expected expenses/(benefits)  $(39,762)  $17,852 
Effect of foreign tax rate difference  $(638)  $946 
Deferred tax assets not recognized  $40,399   $24,040 
Temporary difference not recognized  $-   $(34,684)
Income tax expense  $-   $8,154 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company:

 

  

As of

June 30, 2025

  

As of

December 31, 2024

 
Deferred tax assets:          
           
Net operating loss carry forwards          
- United States of America  $77,419   $80,870 
- Hong Kong  $824   $816 
- People Republic China  $56,167   $12,326 
 Deferred tax assets, net operating loss carryforwards          
Less: valuation allowance  $(134,410)  $(94,012)
Deferred tax assets  $-   $- 

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Despite the Company starting to turn a net profit for the year according to reporting figures, economic uncertainties dictate that the Company will only adjust its valuation allowance policy if it can sustain net profits over consecutive reporting periods. Therefore, the Company has provided for a full valuation allowance against its deferred tax assets of $134,410 as of June 30, 2025.