v3.26.1
TAXES
 12 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
TAXES

NOTE 18 - TAXES

 

Enterprise income taxes (“EIT”)

 

The Company is subject to income taxes on an entity basis on income derived from the location in which each entity is domiciled.

 

Leishen Energy Holding Co., Ltd. is incorporated in Cayman Islands as an offshore holding company and is not subject to tax on income or capital gains under the laws of Cayman Islands.

 

Leishen Energy Group Holding Co., Limited is incorporated in Hong Kong as a holding company with no activities. Under the Hong Kong tax laws, an entity is not subject to income tax if no revenue is generated in Hong Kong.

 

Leishen Energy Group Co., Limited is incorporated in Hong Kong, exempted from profit tax on its foreign-sourced income, and there are no withholding taxes in Hong Kong on remittance of dividends.

 

Under the Enterprise Income Tax (“EIT”) Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”) are subject to a unified 25% EIT rate while preferential tax rates, tax holidays, and even tax exemptions may be granted on case-by-case basis. The PRC tax authorities grant preferential tax treatment to High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. Since China Oil Blue Ocean was approved as an HNTE in December 2022, China Oil Blue Ocean is entitled to a reduced income tax rate of 15% beginning October 2022 and is able to enjoy the reduced income tax rate through October 2025. In October 2025, China Oil Blue Ocean renewed its HNTE certification for another three years. Since ZJY Technologies was approved as an HNTE in December 2022, ZJY Technologies is entitled to a reduced income tax rate of 15% beginning October 2022 and is able to enjoy the reduced income tax rate through October 2025. In December 2025, ZJY Technologies renewed its HNTE certification for another three years.

 

ASC 740-10-25 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. It also provides guidance on the recognition of income tax assets and liabilities, classification accounting for interest and penalties associated with tax positions, years open for tax examination, accounting for income taxes in interim periods and income tax disclosures. There were no material uncertain tax positions as of September 30, 2025 and 2024. As of the date of this audit report, the tax years ended December 31, 2020 through December 31, 2024 for the Company’s PRC subsidiaries remain open for statutory examination for PRC tax.

 

Income before provision for income taxes consisted of:

 

   2025   2024   2023 
   Years Ended September 30, 
   2025   2024   2023 
China  $769,557   $8,175,034   $12,364,226 
Income before provision for income taxes  $769,557   $8,175,034   $12,364,226 

 

 

The income tax (benefit) expense consisted of the following:

 

   2025   2024   2023 
   Years Ended September 30, 
   2025   2024   2023 
Current            
China  $53,307   $1,068,018   $2,156,843 
Deferred               
China   (562,285)   (883,200)   (1,427,337)
Income tax (benefit) expense  $(508,978)  $184,818   $729,506 

 

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

 

   2025   2024   2023 
   Years Ended September 30, 
   2025   2024   2023 
Income tax at expected tax rates   25.0%   25.0%   25.0%
Additional deduction of research and development expenses   (4.8)%   (0.8)%   (0.2)%
Non-deductible expenses   5.2%   0.3%   0.4%
Effect of PRC preferential tax rates (1)   (67.9)%   (20.5)%   (18.2)%
Non-PRC entities not subject to PRC tax (2)   (51.3)%   (1.7)%   (1.3)%
Other   -    -    0.2%
Change of valuation allowance (3)   27.7%   -    - 
Effective tax rate   (66.1)%   2.3%   5.9%

 

(1)

China Oil Blue Ocean and ZJY Technologies were approved as HNTE in December 2022; they are entitled to a 10% reduction in income tax rate from 25% to 15%. Xinjiang Breslin is registered in the Khorgos Economic Development Zone, enjoying a preferential policy of full exemption from corporate income tax for five years.

 

In fiscal year 2025, the losses of other subsidiaries of the Company were offset by the net income generated by Xinjiang Breslin, therefore the preferential tax policy of Xinjiang Breslin reduced the overall effective tax rate of the Company.

 

(2) Leishen Hong Kong is a non-PRC entity not subject to PRC corporate income tax policies. In fiscal year 2025, the net income of Leishen Hong Kong decreased the overall effective tax rate of the Company.

 

(3) With the deregistration of Sichuan Leishen Green on August 1, 2025, losses incurred in fiscal year 2025 cannot be utilized in the future. Management of the Company recognized an allowance of deferred income tax assets (DIA) related to current year losses, resulting in the increase in effective tax rate.

 

Deferred tax assets and liabilities

 

Components of deferred tax assets and liabilities were as follows:

 

   2025   2024 
   As of September 30, 
   2025   2024 
Deferred tax assets          
Allowance for expected credit losses  $1,229,011   $776,991 
Impairment of a long-term investment   -    71,353 
Unbilled cost   3,533,431    2,588,288 
Net operating loss carryforwards   408,789    - 
Total deferred tax assets   5,171,231    3,436,632 
Deferred tax liabilities          
Unbilled revenue   (4,350,674)   (3,492,293)
Long-term investment gain of equity method   -    (12,879)
Other   (218,299)   (238,973)
Total deferred tax liabilities   (4,568,973)   (3,744,145)
Net deferred tax assets (liabilities)  $602,258   $(307,513)

 

Taxes Payable

 

Taxes payable consisted of the following:

 

   2025   2024 
   As of September 30, 
   2025   2024 
VAT payable  $857,680   $317,612 
Income taxes payable   2,915,661    3,091,437 
Other   8,397    9,676 
Total  $3,781,738   $3,418,725 

 

Uncertain tax positions

 

There were no uncertain tax positions as of September 30, 2025 and 2024 and management does not anticipate any potential future adjustments which would result in a material change to its tax positions.