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INCOME TAXES
 12 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 15 INCOME TAXES

 

United States of America

 

The Company is registered in the State of Nevada and is subject to United States of America tax law. The U.S federal income tax rate is 21%.

 

British Virgin Islands

 

Under the current laws of the British Virgin Islands, the international business company which governed by the International Business Companies Act of British Virgin Islands and there is no income tax charged in British Virgin Islands.

 

Hong Kong

 

From year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are 8.25% on assessable profits up to HK$2,000,000 (approximately $289,855), and 16.5% on any part of assessable profits over HK$2,000,000. For the years ended May 31, 2026 and 2025, the Company did not have any assessable profits arising in or derived from Hong Kong, therefore no provision for Hong Kong profits tax was made in the year.

 

 

The PRC

 

The Company’s subsidiaries are incorporated in the PRC, and are subject to the PRC Enterprise Income Tax Laws (“EIT Laws”) with the statutory income tax rate of 25% with the following exceptions.

 

On August 2, 2023, the State Taxation Administration issued the notice on the scope of small-scale and low-profit corporate income tax preferential policies of the Ministry of Finance and the State Administration of Taxation, [2023] No. 12 for small-scale and low-profit enterprises whose annual taxable income is less than RMB3,000,000 (including RMB3,000,000), approximately $426,743, their income is reduced by 25% to the taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 5%. While for the portion of annual taxable income exceeding RMB3,000,000, approximately $426,743, then the income tax rate of 25% is applied.

 

The criterion to qualify as a small-scale and low-profit enterprises are as below:

 

●The enterprise is engaged in industries not restricted or prohibited by the PRC
●Its annual taxable income does not exceed RMB3,000,000.
●The average number of employees is not more than 300 persons (including regular employees and dispatched labour workers)
●The total amount of assets is not more than RMB50,000,000.

 

The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau.

 

The components of the income tax provision are as follows:

 

           
   As of May 31, 
   2026   2025 
   $   $ 
Current          
- United States of America   9,018    - 
- British Virgin Islands   -    - 
- Hong Kong   -    - 
- The PRC   -    1,448 
Current Income Tax Provision   9,018    1,448 
           
Deferred          
- United States of America   -    36,777 
- British Virgin Islands   -    - 
- Hong Kong   -    - 
- The PRC   -    - 
Deferred Income Tax Provision   -    36,777 
           
Tax Refund - The PRC   -    (3,764)
           
Total   9,018    34,461 

 

 

The components of deferred tax assets are summarized as follows:

 

   May 31, 2026   May 31, 2025 
   $   $ 
Deferred tax assets - US NOLs   189,983    226,056 
Deferred tax assets - PRC NOLs   180,660    111,325 
Gross deferred tax assets   370,643    337,381 
Valuation allowance   (370,643)   (337,381)
Deferred tax assets – U.S. NOLs   -    - 

 

The net operating loss carryforwards of the entities in the U.S., and the PRC were $189,983 and $180,660, respectively, as of May 31, 2026. As of May 31, 2025, the net operating loss carryforwards of the entities in the U.S. and the PRC were $226,056 and $111,325, respectively. The net operating losses of the entities in the U.S. can be carried forward indefinitely, while the net operating losses of the PRC entity can be carried forward for five years. The deferred tax assets related to these net operating losses carryforwards were fully offset by a valuation allowance, as the Group does not expect to generate sufficient future taxable income to realize these net operating loss carryforwards.

 

A reconciliation of income tax expense, net determined at U.S federal statutory income tax rate to the Company’s actual income tax expense is as follows:

 

   May 31, 2026   May 31, 2025 
   $   $ 
Loss before tax   (662)   (2,249,564)
Statutory income tax rate   21%   21%
Income tax expense (benefit) at statutory rate   (139)   (472,407)
Foreign tax differential   (8,531)   (74,425)
Non-deductible expenses   88,606    - 
Net operating loss utilised   (37,656)   - 
Change in valuation allowance   (33,262)   581,293 
Income tax expense   9,018    34,461 

 

 

The reconciliation of the U.S federal statutory income tax rate to the Company’s effective tax rate is as follows:

 

   May 31, 2026   May 31, 2025 
   %   % 
U.S. Federal statutory income tax rate   21    21 
Foreign tax differential   1,289    3 
Non deductible expenses   (13,385)   - 
Net operating loss utilised   5,688    - 
Change in valuation allowance   5,024    (26)
Effective income tax rate   (1,363)   (2)