v3.25.2
Income Taxes
 12 Months Ended
Mar. 31, 2025
Income Taxes [Abstract]  
Income Taxes

12. Income Taxes

 

Cayman Islands and British Virgin Islands

 

The Company is incorporated in Cayman Islands and Skyline Builders (BVI) Holding Limited is incorporated in the British Virgin Islands and are not subject to tax on income or capital gains under current Cayman Islands law and British Virgin Islands law, respectively. In addition, upon payments of dividends by these entities to their shareholders, no withholding tax will be imposed.

 

Hong Kong

 

In accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. Hong Kong profit tax rates are 8.25% on assessable profits up to US$256,664 (HK$2,000,000), and 16.5% on any part of assessable profits over US$256,664 (HK$2,000,000).

 

The components of the income tax expense are as follows:

 

   Year Ended March 31, 
   2025   2024   2023 
Current            
Hong Kong  $230,592   $267,209   $62,797 
Deferred               
Hong Kong   (51,267)   (116,475)   53,844 
Provision for income taxes  $179,325   $150,734   $116,641 

The following table reconciles Hong Kong statutory rates to the Company’s effective tax:

 

   2025   2024   2023 
Profit before income taxes  $906,772   $1,080,646   $996,195 
Hong Kong Profits Tax rate   16.5%   16.5%   16.5%
Income taxes computed at Hong Kong Profits Tax rate   149,617    178,307    164,372 
Reconciling items:               
Tax allowance at the statutory tax rates##   48,709    
-
    
-
 
Tax effect of income that is not taxable*   (4,493)   (2,753)   (63,702)
Tax effect of expenses that are not deductible**   7,763    5,866    22,988 
Temporary difference   (903)   (9,220)   14,791 
Statutory tax deduction#   (193)   (383)   (765)
Effect of two-tier tax rate   (21,175)   (21,083)   (21,043)
Income tax expense  $179,325   $150,734   $116,641 

 

*Income that is not taxable mainly consisted of the government subsidies, bank interest income and change in cash value of life insurance policy, which are non-taxable under Hong Kong income tax law.

**Expenses that are not deductible mainly consisted of interest on bank overdraft, stamp duty and equity in net losses of affiliates, which are non-deductible under Hong Kong income tax law.

#It represents a reduction granted by the Hong Kong SAR Government of 100% of the tax payable subject to a maximum reduction of HK$1,500 and HK$3,000 for each business during the years ended March 31, 2025 and 2024, respectively.

##It represents tax allowance at the statutory tax rates for companies incorporated in Cayman Islands and British Virgin Islands.

 

The Company measures deferred tax assets and liabilities based on the difference between carrying amount of assets and liabilities and their respective tax bases at the applicable tax rates. Components of the Company’s deferred tax assets and liabilities are as follows as of March 31:

 

   As of March 31, 
   2025   2024 
Deferred tax assets (liabilities):          
Property, plant and equipment, net  $3,554   $(47,001)
Finance lease right-of-use assets, net   (11,734)   (23,329)
Operating lease right-of-use assets, net   (26,170)   (67,889)
Operating lease liabilities   23,442    63,051 
Provision for allowance of credit losses   66,112    64,859 
Other liabilities   10,037    24,122 
Deferred tax assets (liabilities), net  $65,241   $13,813 

 

Income tax payable consist of the following as of March 31:

 

   2025   2024 
Income tax payable  $(372,816)  $(317,402)

 

Uncertain tax positions

 

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income taxes for the years ended March 31, 2025 and 2024. The Company also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from March 31, 2025.