v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
14.
INCOME TAXES
Cayman Islands
Under the current tax laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Besides, upon payment of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.
United States
As a result of the United States tax law amendments, the federal statutory income tax rate for the subsidiary in the US was 21% for the year ended December 31, 2025. Burning Rock Dx LLC operated its business in the states of California, Maryland, Colorado and Massachusetts, and was also subject to state income tax at rates of approximately 8.84%, 8.25%, 4.25% and 8.0%, respectively, for the year ended December 31, 2025.
Hong Kong
BR Hong Kong Limited is incorporated in Hong Kong and is subject to Hong Kong profits tax of 16.5% on its activities conducted in Hong Kong.
PRC
The Company’s subsidiaries, VIE and subsidiaries of the VIE domiciled in the PRC are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax law (the ‘‘EIT Law’’), which was effective since January 1, 2008 except for the following entity which is eligible for a preferential tax rate.
Guangzhou Burning Rock Dx Co., Ltd. was recognized as a qualified HNTE under the EIT Law by the relevant government authorities in December 2025 and is subject to a preferential rate of 15% for three years from 202
5
to 202
7
.
Burning Rock Biotechnology (Shanghai) Co., Ltd. was recognized as a qualified HNTE under the EIT Law by the relevant government authorities in December 2024 and is subject to a preferential rate of
 15% for three years from 2024 to 2026.
Dividends, interests, rent or royalties payable by the Company’s PRC subsidiaries, to
non-PRC
resident enterprises, and proceeds from any such
non-resident
enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% withholding tax, unless the respective
non-PRC
resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with China that provides for a reduced withholding tax rate or an exemption from withholding tax.
The Group’s loss before income tax consists of:
 
    
For the years ended December 31,
  
    
2023
     
2024
     
2025
  
    
RMB
     
RMB
     
RMB
     
US$
  
PRC
      (604,997 )       (305,469 )       (23,940 )       (3,424 ) 
Non-PRC
      (46,304 )       (35,272 )       (29,850 )       (4,269 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Total loss before income tax
      (651,301 )       (340,741 )       (53,790 )       (7,693 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
 
 
 
The current and deferred components of the income tax expenses are as follows:
 
    
For the years ended December 31,
  
    
2023
     
2024
     
2025
  
    
RMB
     
RMB
     
RMB
     
US$
  
Current income tax expenses
      2,388        5,885        1,556        223  
Deferred income tax expenses
      —         —         —         —   
  
 
 
     
 
 
     
 
 
     
 
 
  
Total income tax expenses
      2,388        5,885        1,556        223  
  
 
 
     
 
 
     
 
 
     
 
 
  
Reconciliation between the income tax expenses computed by applying the statutory tax rate to loss before income tax and the actual provision for income tax is as follows:
 
    
For the years ended
December 31,
  
    
2023
    
2024
  
    
RMB
    
RMB
  
Loss before income tax
      (651,301 )      (340,741 ) 
PRC statutory income tax rate
      25 %      25 % 
Income tax at statutory tax rate
      (162,825 )      (85,185 ) 
Effect of different tax rates
      (439 )      355  
Effect of PRC preferential tax rates
      10,258       530  
Research and development super-deduction
      (21,812 )      (15,814 ) 
Non-deductible
expenses
      69,646       38,398  
Non-taxable
income
      (1,807 )      (1,776 ) 
Expiration of tax attributes
      12,421       14,327  
Deferred only adjustment
      (3,083 )      (1,367 ) 
Transfer pricing adjustment
      12,011       3,460  
Interest and penalty
      219       783  
Tax rate change
      (13,453 )      (431 ) 
Provision to return
      2,722       (7,900 ) 
Changes in valuation allowance
      98,530       60,505  
  
 
 
    
 
 
  
Income tax expenses
      2,388       5,885  
  
 
 
    
 
 
  
 
 
 
Reconciliation between the income tax expenses computed by applying the statutory tax rate to loss before income tax and the actual provision for income tax is as follows (continued):
 
    
For the years ended December 31,
  
    
2025
  
    
RMB
    
US$ 
    
Percent
  
Income tax expense at PRC statutory rate
      (13,448 )      (1,923 )      25 % 
Foreign Tax Effect
s
       
Cayman Islands
       
Statutory tax rate difference between PRC and other jurisdictions
      1,223       175       -2 % 
Hong Kong
       
Statutory tax rate difference between PRC and other jurisdictions
      (144 )      (21 )      0 % 
Non-deductible
expenses
      1,008       144       -2 % 
Non-taxable
income
      (1,287 )      (184 )      2 % 
United States
       
Statutory tax rate difference between PRC and other jurisdictions
      (842 )      (120 )      2 % 
Deferred only adjustment
      1,350       193       -3 % 
Changes in valuation allowance
      6,210       888       -12 % 
Others
      (54 )      (8 )      0 % 
Effect of PRC preferential tax rates
      3,485       498       -6 % 
Non-deductible
expenses
     
           
 
Exchange gain and loss
      7,891       1,128       -15 % 
Nondeductible ESOP expense
      3,548       507       -7 % 
Excessive Entertainment
      4,260       609       -8 % 
Disposal loss
      810       116       -2 % 
Others
      670       97       -1 % 
Changes in valuation allowance
      14,831       2,121       -28 % 
Changes in Unrecognized Tax Benefits
      1,335       191       -2 % 
Other adjustments
       
Research and development super-deduction
      (57,595 )     (8,235 )     107 % 
Tax rate change
      870       124       -2 % 
Provision to return
      14,232       2,035       -26 % 
Expiration of tax attributes
      12,504       1,788       -23 % 
Interest and penalty
      699       100       -1 % 
Income tax expenses
   
 
1,556
 
  
 
223
 
  
 
-3
% 
 
 
 
The principal components of the deferred tax assets and liabilities are as follows:
 
    
As of December 31,
  
    
2024
     
2025
  
    
RMB
     
RMB
     
US$
  
Deferred tax assets:
         
Accruals and reserves
      35,942        43,347        6,199  
Net operating loss carried forward
      228,450        262,425        37,526  
Depreciation and amortization
      1,460        4,711        674  
Excessive education fee
      521        485        69  
Capitalized research and development expense
      20,048        11,092        1,586  
Research and development expense recognition
      295,499        287,854        41,162  
Deferred revenue recognition
      1,993        1,932        276  
Excessive donation expense carried forward
      1,943        1,442        206  
Impairment loss on fixed asset and intangible asset
      8,884        2,646        377  
Fair value change on financial assets
      1,330        1,250        179  
Operating lease liabilities
      13,195        8,502        1,216  
  
 
 
     
 
 
     
 
 
  
Gross deferred tax assets
      609,265        625,686        89,470  
  
 
 
     
 
 
     
 
 
  
Less: Valuation allowance
      (595,868 )       (616,909 )      (88,216 )
  
 
 
     
 
 
     
 
 
  
Total deferred tax assets
      13,397        8,777        1,254  
  
 
 
     
 
 
     
 
 
  
Deferred tax liabilities:
         
Operating
right-of-use
assets
      (13,397 )       (8,777 )      (1,254 )
  
 
 
     
 
 
     
 
 
  
Total deferred tax liabilities
      (13,397 )       (8,777 )
 
      (1,254 )
 
  
 
 
     
 
 
     
 
 
  
Net deferred tax assets
      —         —         —   
  
 
 
     
 
 
     
 
 
  
The Company operates through its subsidiaries, VIE and subsidiaries of the VIE and valuation allowance is considered on an individual entity basis. The Company recorded full valuation allowance against deferred tax assets of those entities that were in a three-year cumulative financial loss and are not forecasting profits in the near future as of December 31, 2024 and 2025. In making such determination, the Company also evaluated a variety of factors including the Company’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods.
As of December 31, 2024 and 2025, the Group had net operating losses of RMB885,130 and RMB1,031,125 (US$147,449), respectively, from its PRC subsidiaries and US subsidiary. The tax losses in the PRC can be carried forward for five years to offset future taxable income, and the period is extended to ten years for entities that qualify as a HNTE. The Company’s net operating losses from PRC subsidiaries are estimated to expire beginning 2025, and the net operating losses from United States subsidiary can be carried forward with no expiration date.
 
 
 
As of December 31, 2025, the Company intends to permanently reinvest the undistributed earnings from foreign subsidiaries to fund future operations. As of December 31, 2025, the total amount of undistributed earnings from its PRC subsidiaries as well as VIE is nil. The total undistributed earnings of the Company’s Hong Kong subsidiary is RMB42,444 (US$6,069). The amount of unrecognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries is not determined because such a determination is not practicable.
Unrecognized tax benefits
As of December 31, 2024 and 2025, the Company recorded an unrecognized tax benefits of RMB11,338 and RMB13,738 (US$1,964), respectively, of which RMB9,172 and RMB10,029 (US$1,434) are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. It is possible that the amount of uncertain tax position will change in the next twelve months; however, an estimate of the range of the possible outcomes cannot be made at this moment. As of December 31, 2025, unrecognized tax benefits of RMB13,738 (US$1,964), if ultimately recognized, will impact the effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefit was as follows:
 
    
For the years ended December 31,
  
    
2024
     
2025
  
    
RMB
     
RMB
     
US$
  
Balance at beginning of the year
      19,353        11,338        1,621  
Additions
      —         2,400        343  
Decreases
      (8,015 )       —         —   
  
 
 
     
 
 
     
 
 
  
Balance at end of the year
   
 
11,338
 
   
 
13,738
 
   
 
1,964
 
  
 
 
     
 
 
     
 
 
  
The Company records interest and penalties as part of its income tax expense. For the year ended December 31, 2025, the Company recorded RMB699 (US$100) of interest expense in relation to the unrecognized tax benefit into income tax expense. The accumulated interest expense accrued in relation to the unrecognized tax benefit is RMB1,701 (US$243) as of December 31, 2025.
In general, the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company’s PRC subsidiaries, the VIE and the VIE’s subsidiaries. Accordingly, the PRC tax filings from 20
20
through 202
5
remain open to examination by the respective tax authorities. The Group may also be subject to examinations of tax filings in other jurisdictions, which are not material to the consolidated financial statements.