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INCOME TAXES
 6 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 7 – INCOME TAXES

 

Income Taxes

 

Seychelles

 

RQS United is incorporated in Seychelles and is not subject to tax by Seychelles on income generated outside of Seychelles under the current law. In addition, upon payment of dividends, no withholding tax is imposed under current law.

 

United States

 

Tianci is incorporated in the United States and is subject to U.S. federal corporate income tax at a statutory rate of 21%. State income taxes are imposed in addition to the federal rate where applicable. 

 

Hong Kong

 

Roshing is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. Incorporated companies pay 8.25% tax on the first HKD 2 million of profits and 16.5% on the remainder. Hong Kong income tax expenses for the six months ended January 31, 2026 and 2025 amounted to $0 and $6,891, respectively.

 

For the six months ended January 31, 2026, the loss before provision for income taxes of $(685,998) consisted of United States source loss of $(505,975) and Hong Kong source loss of $(180,023). For the six months ended January 31, 2025, the loss before provision for income taxes of $(196,028) consisted of United States source loss of $(237,794) and Hong Kong source income of $41,766.

 

Significant components of the provision for income taxes are as follows:

        
   For the six months ended 
  

January 31,

2026

  

January 31,

2025

 
         
Current Hong Kong  $–   $6,891 
Deferred Hong Kong   –    – 
Provision for income taxes  $–   $6,891 

 

The following table reconciles the United States statutory rates to the Company’s effective tax rate:

        
   For the six months ended 
  

January 31,

2026

  

January 31,

2025

 
         
United States statutory tax rate   21.0%   21.0%
Foreign tax rate differential – Hong Kong (including two-tier regime)   (1.2)%   1.0%
Change in valuation allowance   (19.8)%   (25.5)%
Effective tax rate   –%    (3.5)%

 

Deferred tax assets are comprised of the following:

        
   As of 
  

January 31,

2026

  

July 31,

2025

 
         
Net operating loss carryforwards  $942,975   $807,016 
Warrants not excised   33,267    33,267 
Allowance for deferred tax assets   (976,242)   (840,283)
Deferred tax assets, net  $–   $– 

 

For United States income tax purposes, Tianci and Roshing had net operating loss carryforwards of approximately $3,994,000 and $631,000, respectively, as of January 31, 2026. Management has not determined that it is more likely than not that this carryforward will be realized, and therefore the Company maintains a 100% valuation allowance for the deferred tax asset relating to the United States net operating loss carryforward. Current United States income tax law limits the amount of loss available to offset against future taxable income when a substantial change in ownership occurs. 

 

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 January 31, 2026 and July 31, 2025, the Company did not have any significant unrecognized uncertain tax positions.

 

As of January 31, 2026, tax years for the year ended July 2023 and forward generally remain open for examination for United States Federal and State tax purposes and tax years 2019/2020 and forward generally remain open for examination for Hong Kong tax purposes.