v3.26.1
Taxation
 12 Months Ended
Dec. 31, 2025
Taxation [Abstract]  
TAXATION

18. TAXATION

 

Under the current laws of the Cayman Islands, the Group is not subject to tax on income or capital gains. Additionally, upon payment of dividends by the Group to its shareholders, no Cayman Islands withholding tax will be imposed. The Company’s subsidiaries in Hong Kong are subject to Hong Kong Profits Tax rate at 16.5%, and foreign-derived income is exempted from income tax. There are no withholding taxes upon payment of dividends by the subsidiaries incorporated in Hong Kong to its shareholders. The Group’s subsidiaries incorporated in Hong Kong are not liable for income tax as they did not have any assessable profits arising in Hong Kong during the Relevant Periods.

 

PRC corporate income tax has been provided at the rate of 25% on the taxable profits of the Group’s PRC subsidiaries for the Relevant Periods. Certain of the Group’s PRC subsidiaries are qualified as small and micro enterprises and were entitled to a preferential corporate income tax rate of 2.5% to 5% during 2024 and 2025, respectively. Certain of the Group’s PRC subsidiaries are accredited as “High and New Technology Enterprise” and were therefore entitled to a preferential income tax rate of 15% for the years ended 31 December 2024 but lost the “High and New Technology Enterprise” qualification in 2025. Accordingly, the 25% standard CIT rate applies in 2025. This change may affect the recoverability of deferred tax assets. If taxable profits remain low, the recognized DTAs may not be fully recoverable. Management reassesses the valuation allowance adequacy annually. Any additional allowance would reduce net profit.

 

The income tax expense of the Group for the Relevant Periods is analysed as follows:

 

   For the Year Ended 31 December, 
   2023   2024   2025 
   RMB   RMB   RMB   USD 
Current tax:                
PRC corporate income tax   5,776    3,767    2,969    425 
Deferred tax liabilities   (1,497)   
-
    
-
    
-
 
Deferred tax assets, net   (35,469)   7,323    4,778    683 
Total income tax expense/(benefit)   (31,190)   11,090    7,747    1,108 
Less: income tax expenses from the discontinued operations   934    
-
    
-
    
-
 
Income tax income tax expense/(benefit) from the continuing operations   (30,256)   11,090    7,747    1,108 

 

A reconciliation of tax expense applicable to profit before tax at the statutory rate for the jurisdictions in which the majority of the Group’s subsidiaries are domiciled to the income tax expense at the effective income tax rate for each of the Relevant Periods is as follows:

 

   For the Year Ended 31 December, 
   2023   2024   2025 
   RMB   RMB   RMB   USD 
Profit/(Loss) before tax   49,016    (41,298)   50,457    7,214 
Tax at the statutory tax rate (25%)   12,254    (10,325)   12,614    1,804 
Impact of preferential tax rates   1,836    13,190    (756)   (108)
Non-taxable income   (8,912)   (822)   (6,910)   (988)
Non-deductible expense   622    605    5,127    733 
Research and development super-deduction   (12,254)   (2,504)   (4,217)   (603)
Loss from equity investment   
-
    13,244    
-
    
-
 
Change of valuation allowance   (23,802)   (2,298)   1,889    270 
Income tax (benefit)/ expense   (30,256)   11,090    7,747    1,108 

Deferred taxes

 

The components of deferred tax assets and liabilities are as follows:

 

   As of December 31, 
   2024   2025 
   RMB   RMB   USD 
Deferred tax assets:            
Bad debt provision   12,788    7,194    1,029 
Lease liabilities   9,326    8,071    1,154 
Net operating loss carry forwards   57,345    59,778    8,548 
Total gross deferred tax assets   79,459    75,043    10,731 
Valuation allowance on deferred tax assets   (40,523)   (42,412)   (6,065)
Deferred tax assets, net of valuation allowance   38,936    32,631    4,666 
Deferred tax (liabilities)-non current:               
Right-of-use assets   (10,789)   (9,262)   (1,324)
Total deferred tax   28,147    23,369    3,342 

 

As of December 31, 2025, there was no significant unrecognized deferred tax liability for taxes that would be payable on the unremitted earnings of the Group’s subsidiaries.

 

Uncertain Tax Position

 

The Group evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2024 and 2025, the Group did not have any significant unrecognized uncertain tax positions.

 

As of December 31, 2025, the Group had net operating loss carry forwards of RMB239,112, primarily attributable to the PRC subsidiaries. For HNTEs, the loss carried forward will expire during the period from year 2025 to year 2034. For the other PRC companies, the loss carried forward will expire during the period from year 2025 to year 2029.

 

   As of December 31, 
   RMB   USD 
2026   28,689    4,103 
2027   44,331    6,339 
2028   58,698    8,394 
2029   71,436    10,215 
Thereafter   35,958    5,142 
Total   239,112    34,193