v3.26.1
Income Tax Benefits (Expense)
 12 Months Ended
Dec. 31, 2025
Income Tax Benefits (Expense) [Abstract]  
INCOME TAX BENEFITS (EXPENSE)

19. INCOME TAX BENEFITS (EXPENSE)

 

Income tax

 

Cayman Islands

 

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments.

 

BVI

 

New Achiever is incorporated in the BVI and is not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.

 

Hong Kong

 

Samfine HK 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. The applicable tax rate is 16.5% in Hong Kong. From year of assessment of 2019/2020 onwards, Hong Kong profits tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. Under Hong Kong tax law, Samfine HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.

 

PRC

 

Samfine SZ and Samfine SZ Technology are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis.

 

Samfine SZ applied and officially obtained a preferential tax concession for being a high technology enterprise whereby Samfine SZ was entitled to have a tax concession at 15% under the PRC EIT for the coming three years since 2024.

 

Since 2022, according to a notice jointly released by the Ministry of Finance and two other government departments, high and new technology enterprise entitled to the pre-tax deduction of 75% for research and development expenses.

 

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

  

   Years ended December 31, 
   2023   2024   2025   2025 
   HK$   HK$   HK$   US$ 
Current:                
Hong Kong   
—
    
—
    
—
    
—
 
PRC   14,234    9    43,766    5,623 
    14,234    9    43,766    5,623 
Deferred:                    
Hong Kong   (908,713)   907,664    (9,712)   (1,248)
PRC   
—
    18,830    234,295    30,103 
    (908,713)   926,494    224,583    28,855 
Income tax (benefits) expense   (894,479)   926,503    268,349    34,478 

The following table reconciles HK statutory rates to our effective tax rate:

 

   Years ended December 31, 
   2023   2024   2025 
Income tax rate in the Cayman Islands   0.0%   0.0%   0.0%
Income tax rate in the BVI   0.0%   0.0%   0.0%
Hong Kong statutory income tax rate   16.5%   16.5%   16.5%
Tax effect of different tax rate for operation in the PRC   (0.5)%   (0.7)%   0.1%
Effect of super deduction for research and development in the PRC   5.5%   0.0%   0.0%
Temporary difference not recognized   (0.7)%   0.0%   0.0%
Income not taxable   0.3%   0.6%   0.0%
Non-deductible expenses   (0.2)%   (2.1)%   (0.2)%
Tax effect of tax losses*   0.0    (49.5)%   (17.3)%
Effect of changes in valuation allowance   0.0    (18.2)%   (0.5)%
Effective tax rate   20.9%   (53.4)%   1.4%

 

* The tax losses not recognized represented by the tax loss position under Samfine Creation Holdings Group which is incorporated in Cayman Islands which is not subject to any income tax.

 

Deferred tax

 

Significant components of deferred tax liabilities were as follows:

 

Accelerated depreciation  HK$ 
As of December 31, 2024   156,926 
Charged to consolidated statements of operations and comprehensive income (loss) during the year   (150,400)
As of December 31, 2025   6,526 
As of December 31, 2025 (US$)   838 

 

Significant components of deferred tax assets were as follows:

 

   Net
operating
losses		   Allowance for
expected credit
losses		   Total 
   HK$   HK$   HK$ 
As of December 31, 2023   2,413,898    226,489    2,640,387 
Recognized   315,355    
—
    315,355 
Utilized during the year   (624,001)   (145,567)   (769,568)
Less: valuation allowance   (315,355)   
—
    (315,355)
As of December 31, 2024   1,789,897    80,922    1,870,819 
Recognized   107,292    17,604    124,896 
Utilized during the year   (392,587)   
—
    (392,587)
Less: valuation allowance   (107,292)   
—
    (107,292)
As of December 31, 2025   1,397,310    98,526    1,495,836 
As of December 31, 2025 (US$)   179,527    12,658    192,185 

 

We have provided full valuation allowance on deferred tax assets of Samfine SZ and Samfine SZ Technology because management considers there will not be sufficient taxable income for Samfine SZ and Samfine SZ Technology to utilize their deferred tax assets in the foreseeable future. While the remaining deferred tax assets are expected to be used by Samfine HK since the management considers there will be sufficient taxable income to utilize their deferred tax assets in the foreseeable future.