8. Income tax

Cayman Islands

The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman withholding tax will be imposed.

British Virgin Islands (“BVI”)

Star Fashion BVI is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Star Fashion BVI is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed.

Hong Kong

The Company’s subsidiary incorporated in Hong Kong is subject to profits tax in Hong Kong at the rate of 16.5%. According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, effective April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD 2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations. The Group was not subject to Hong Kong profit tax for the six months ended December 31, 2023 and 2024, respectively, as it did not have assessable profit during the periods presented.

PRC

Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%.

The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto management body “as” the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, property, of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its operations outside of the PRC should be considered as a resident enterprise for the PRC tax purposes for the six months ended December 31, 2022 and 2023.

In accordance with Taxation [2021] No. 12, which was effective from January 1, 2021 to December 31, 2022 and Taxation [2022] No. 13 which was effective from January 1, 2022 to December 31, 2024, an enterprise qualified as a small-scale and low-profit enterprise receives a tax preference including a preferential tax rate of 2.5% on its taxable income below RMB1 million, and another preferential tax rate of 10% and 5% on its taxable income between RMB1 million and RMB3 million from January 1, 2021 to December 31, 2021, and from January 1, 2022 to December 31, 2022, respectively. In accordance with Taxation [2023] No. 6, which was effective from January 1, 2023 to December 31, 2024, preferential tax rate became 5% on taxable income below RMB3 million.

The following table sets forth current and deferred portion of income tax expense of the Company’s subsidiaries:

A reconciliation between the Group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate is as follows:

As of June 30, 2025 and December 31, 2025, the Company did not have any significant unrecognized uncertain tax positions and the Company does not believe that its unrecognized tax benefits will change over the next twelve months. For the six months ended December 31, 2024 and 2025 the Company did not have any significant interest or penalties associated with uncertain tax positions.

For entities incorporated in PRC mainland, net loss can be carried forward for five years. The Group had losses carried forward amounting to 5,329,188 as of December 31, 2025. As of June 30, 2025 and December 31, 2025, deferred tax assets from allowance of doubtful accounts were nil, respectively. No valuation allowance has been made for these deferred tax assets because management reliably estimate the benefit of potential tax assets would be realized.

Cayman Islands

The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman withholding tax will be imposed.

British Virgin Islands (“BVI”)

Star Fashion (BVI) is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Star Fashion (BVI) is not subject to tax on income or capital gains. Additionally, upon payments of dividends by Star Fashion (BVI) to its shareholders, no BVI withholding tax will be imposed.

Hong Kong

The Company’s subsidiary incorporated in Hong Kong is subject to profits tax in Hong Kong at the rate of 16.5%. According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, effective April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations. The Group was not subject to Hong Kong profit tax for the years ended June 30, 2023, 2024 and 2025, respectively, as it did not have assessable profit during the periods presented.

PRC

Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%.

The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto management body “as” the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, property, of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its operations outside of the PRC should be considered as a resident enterprise for the PRC tax purposes for the years ended June 30, 2023, 2024 and 2025.

The income tax provision consisted of the following components:

A reconciliation between the Group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate was as follows:

As of June 30, 2024 and 2025, the Company did not have any significant unrecognized uncertain tax positions and the Company does not believe that its unrecognized tax benefits will change over the next twelve months. For the years ended June 30, 2023, 2024 and 2025 the Company did not have any significant interest or penalties associated with uncertain tax positions. The significant components of the net deferred tax assets are summarized below:

For entities incorporated in PRC mainland, net loss can be carried forward for five years. The Group had losses carried forward amounting to 126,579,306 as of June 30, 2025. As of June 30, 2024 and 2025, deferred tax assets from allowance of doubtful accounts were RMB1,217,929 and nil, respectively. No valuation allowance has been made for these deferred tax assets because management reliably estimate the benefit of potential tax assets would be realized.