Note 14 – Income taxes

(a) Corporate income tax

Zeta

Under the current laws of the Cayman Islands, Zeta is not subject to tax on income or capital gains. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

CACM

CACM is organized in the New York State in the United States. CACM had no taxable income for the U.S. income tax purposes for the years ended June 30, 2026, 2025 and 2024. The applicable tax rate is 21.0% for federal and 7.3% for New York State with an effective tax rate of 26.8%.

Color Star Ohio

Color Star Ohio is organized in the Ohio State in the United States. Color Star Ohio had no taxable income for the U.S. income tax purposes for the years ended June 30, 2026, 2025 and 2024. The applicable tax rate is 21.0% for federal and no state tax in Ohio State with an effective tax rate of 21.0%.

Model Queen

Model Queen is organized in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong. The Company did not make any provisions for Hong Kong Profits Tax as there were no assessable profits derived from or earned in Hong Kong since inception.

Loss before provision for income taxes consisted of:

Adoption of ASU 2023-09

Effective July 1, 2025, the Company adopted Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision-usefulness of income tax disclosures, primarily through expanded requirements relating to the effective tax rate reconciliation and income taxes paid.

The Company adopted ASU 2023-09 effective July 1, 2025, on a prospective basis. Accordingly, the enhanced income tax rate reconciliation disclosure requirements have been applied to the year ended June 30, 2026. The comparative information for the years ended June 30, 2025 and 2024 has not been retrospectively adjusted.

Income tax rate reconciliation

The comparative income tax rate reconciliations for the years ended June 30, 2025 and 2024 are presented in accordance with the disclosure requirements applicable prior to the adoption of ASU 2023-09.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended June 30, 2026:

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended June 30, 2025, and 2024:

Significant components of deferred tax assets were as follows:

As of June 30, 2026, and 2025, CACM and Color Star Ohio’s net operating loss carry forward for the U.S. income taxes was approximately $3.8 million and $2.7 million, respectively. The net operating loss carry forwards are available to reduce future years’ taxable income for unlimited years but limited to 80% use per year. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s operating history and continued losses in the U.S. If the Company is unable to generate taxable income in its United States operations, it is more likely than not that it will not have sufficient income to utilize its deferred tax assets. Accordingly, the Company has provided a 100% valuation allowance on its net deferred tax assets of approximately $1.0 million and $0.7 million related to its U.S. operations as of June 30, 2026, and 2025, respectively.

As of June 30, 2026, and 2025, Model Queen’s net operating loss carry forward for the Hong Kong income taxes was $5.4 million and $0.3 million, respectively. The net operating loss carry forwards are available to reduce future years’ taxable income indefinitely. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s operating history in Hong Kong. If the Company is unable to generate taxable income in its Hong Kong operations, it is more likely than not that it will not have sufficient income to utilize its deferred tax assets. Accordingly, the Company has provided a 100% valuation allowance on its net deferred tax assets of approximately $0.9 million and $42,000 related to its Hong Kong operations as of June 30, 2026, and 2025, respectively.

Changes in the valuation allowance for deferred tax assets increased by $2,560,166 from $757,278 on June 30, 2025, to $3,317,444 on June 30, 2026. Changes in the valuation allowance for deferred tax assets increased by $51,012 from $706,266 on June 30, 2024, to $757,278 on June 30, 2025.

For the years ended June 30, 2026, 2025 and 2024, no income taxes were paid.

(b) Uncertain tax positions

There were no uncertain tax positions as of June 30, 2026, and 2025, and management does not anticipate any potential future adjustments which would result in a material change to its tax positions. For the years ended June 30, 2026, 2025 and 2024, the Company did not incur any tax related interest or penalties.