NowNews Digital Media Technology Co. Ltd.

NOTE 8: INCOME TAX

United States

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the period. The applicable income tax rate for the Company was 35% for the years ended December 31, 2016 and 2015. No tax benefit has been realized since a 100 % valuation allowance has offset deferred tax asset resulting from the net operating losses.

Anguilla

Worldwide Media Investments Corp. and Sky Media are incorporated in Anguilla, which does not tax income.

Taiwan

NOWnews Network and NOWnews International are incorporated in Taiwan. The Taiwan Income Tax Law imposes a unified enterprise income tax rate of 17% on all enterprises with taxable income greater than approximately $3,704 (NT$120,000). No income tax liabilities existed as of December 31, 2016 and 2015 due to the Company’s continuing operating losses.

Provision for income tax consists of the following:

	For the Years Ended
	December 31,
	2016		2015
Current
USA	$	-	$	-
Taiwan		-		-

Deferred
USA
Deferred tax assets for NOL carryforwards		(1,684,235)		(104,129)
Valuation allowance		1,684,235		104,129
Net changes in deferred income tax under non-current portion		-		-

Taiwan
Noncurrent portion
NOL carryforwards		(54,171)		(160,562)
Valuation allowance		54,171		160,562
Net changes in deferred income tax under non-current portion		-		-

Total provision for income tax	$	-	$	-

The following is a reconciliation of the statutory tax rate to the effective tax rate:

	For the Years Ended
	December 31,
	2016			2015

U.S. statutory income tax rate		35.0	%		35.0	%
Foreign statutory income tax rate difference		(18.0)	%		(18.0)	%
Changes in valuation allowance		(17.0)	%		(17.0)	%
Effective income tax rate		0.0	%		0.0	%

Significant components of the Company’s deferred taxes as of December 31, 2016 and 2015 were as follows:

	December 31,		December 31,
	2016		2015
Deferred tax assets:
Net operating loss carryforwards	$	3,170,956	$	1,924,332
Less: Valuation allowance		(3,170,956)		(1,924,332)
Deferred tax assets, net	$	-	$	-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considered projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2016 and 2015, the Company accrued 100% valuation allowance against its deferred tax assets based on the assessment of the probability of future realization.