13.         INCOME TAXES

Cayman Islands

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation.

Hong Kong

The subsidiaries established in Hong Kong are subject to a two-tiered income tax rate for taxable income earned in Hong Kong effectively since April 1, 2018. The first 2 million Hong Kong dollars of profits earned by a company are subject to taxes at an income tax rate of 8.25%, while the remaining profits will continue to be taxed at the existing tax rate of 16.5%, and each group of connected entities can nominate only one entity to benefit from the two-tiered tax rate. The provision for Hong Kong profits tax in the consolidated financial statements was immaterial for the years ended February 29, 2024, February 28, 2025 and 2026.

Chinese Mainland

Under the PRC Enterprise Income Tax Law, the enterprise income tax (“EIT”) rate is 25% for most enterprises with the following exceptions.

TAL Beijing and Beijing Xintang Sichuang are qualified as High and New Technology Enterprises (“HNTE”) and accordingly entitled to a preferential tax rate of 15% from calendar years 2020 through 2025. TAL Beijing and Beijing Xintang Sichuang are in the process of renewing their qualifications of HNTE and are expected to be subject to an EIT rate of 15% for calendar years 2026 as long as they maintain their HNTE status.

Beijing Yizhen Xuesi Education Technology Co., Ltd. (“Yizhen Xuesi”) is qualified as HNTE and accordingly entitled to a preferential tax rate of 15% from calendar years 2023 through 2026.

Shenzhen Xingtong is qualified as HNTE and accordingly entitled to a preferential tax rate of 15% from calendar years 2024 through 2026.

13.         INCOME TAXES - continued

The components of income before income taxes were attributable to the following regions:

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For the year ended February 28, 2026, income tax expenses amounted to $146,439 in Chinese mainland, and income tax expenses amounted to $7,978 in jurisdictions outside Chinese mainland.

Provision for income tax consists of the following:

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Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Significant components of the Group’s deferred tax assets and liabilities were as follows:

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13.         INCOME TAXES - continued

The Group’s operating loss carry-forward is mainly from entities in the PRC. As of February 28, 2026, the Group had operating loss carry-forward of $610,183 from entities in the PRC to offset the future taxable profit for five years, and the period was extended to ten years for entities which was qualified as HNTE in calendar year 2018 and thereafter. The Company operates its business through its subsidiaries, its VIEs and their subsidiaries and schools. The Group does not file combined or consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs and their subsidiaries and schools may not be used to offset other subsidiaries’ or VIEs’ earnings within the Group. Valuation allowance is considered on each individual subsidiary and VIE basis. Valuation allowances of $512,788 and $570,727 were recognized as of February 28, 2025 and 2026, respectively, in respect of certain deferred tax assets as it is considered more likely than not that the relevant deferred tax assets will not be realized in the foreseeable future.

Under U.S. GAAP, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting amounts over tax basis amounts, including those differences attributable to a more than 50% interest in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Company has not recorded any such deferred tax liability attributable to the undistributed earnings in China because it intends to permanently reinvest all undistributed earnings in China and its subsidiaries do not intend to declare dividends to the Company.

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The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more likely than not to be sustained upon inspection by the relevant tax authorities. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated financial statements for the years ended February 29, 2024, February 28, 2025 and 2026. The Group did not incur any significant interest and penalties related to potential underpaid income tax expenses and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months. The Group has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future years.

According to the PRC Tax Administration and Collection Law, the tax authority may require the taxpayer or the withholding agent to make delinquent tax payment within three years if the underpayment of taxes is resulted from the tax authority’s act or error. No late payment surcharge will be assessed under such circumstances. The statute of limitation will be three years if the underpayment of taxes is due to the computational errors made by the taxpayer or the withholding agent. Late payment surcharge will be assessed in such case. The statute of limitation will be extended to five years under special circumstances which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a “special circumstance”). The statute of limitation for transfer pricing related issue is ten years. There is no statute of limitation in the case of tax evasion. Therefore, the Group is subject to inspection by the PRC tax authorities based on the above.

13.         INCOME TAXES - continued

Reconciliation between the provision for income taxes computed by applying the PRC EIT rates of 25% in fiscal years 2024 and 2025 to income before provision for income tax and the actual provision for income tax were as follows:

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Upon adoption of ASU 2023-09, reconciliation of difference between the PRC statutory income tax rate and the Group’s effective income tax rate for the year ended February 28, 2026 was as follows:

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13.         INCOME TAXES - continued

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If the Group did not enjoy income tax exemptions and preferential tax rates for the years ended February 29, 2024, February 28, 2025 and 2026, the increase in income tax expenses and the corresponding net (loss) / income per share amounts would be as follows:

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The PRC EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within the PRC. The Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for PRC EIT law purposes. If the PRC tax authorities subsequently determine that the Company and its subsidiaries registered outside the PRC should be deemed a resident enterprise, the Company and its subsidiaries registered outside the PRC will be subject to the PRC income tax at a rate of 25% with the statute which is subject to the determination by PRC tax authorities.

If the Company were to be non-resident for PRC tax purpose, dividends paid to it out of profits earned after January 1, 2008 would be subject to a withholding tax. In the case of dividends paid by PRC subsidiaries, the withholding tax would be 10%.

The aggregate undistributed earnings of the Company’s subsidiaries, the VIEs and their subsidiaries and schools located in the PRC that are available for distribution are $2,841,246 and $3,453,450 as of February 28, 2025 and 2026, respectively. Upon distribution of such earnings, the Company will be subject to PRC withholding taxes, the amount of which is impractical to estimate. The Company intends to permanently reinvest all undistributed earnings in China and its subsidiaries do not intend to declare dividends to the Company. Therefore, the Company has not recorded any such deferred tax liability attributable to the undistributed earnings of the Company’s subsidiaries, the VIEs and their subsidiaries and schools located in the PRC.