Entity information:
6.
           INCOME TAXES
 
Under the provision of ASC Topic
740,
the Company has analyzed its filing position in the jurisdictions where it is subject to income taxes. The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which they are domiciled and operate. As of
December
31,
2016
and
2015,
the Company has identified its operations in the United States and Hong Kong are subject to income taxes. Based on the evaluations noted above, no income taxes have been provided for as the Company incurred losses for taxation purposes in the years ended
December
31,
2016
and
2015.
 
 
Reconciliation from the statutory tax rate in Hong Kong is as follows:
 
 
 
Year ended December 31,
 
 
 
2016
 
  
2015
  
 
%
 
%
 
                 
Statutory rate
    
16.5
      
16.5
  
Non-deductible expenses
    
(11
)
    
(11
)
Valuation allowance in respect of net operating losses
    
(7
)
    
(7
)
Valuation allowance in respect of temporary differences
    
1.5
      
1.5
  
                 
Effective rate
    
-
      
-
  
 
For the years ended
December
31,
2016
and
2015,
the Hong Kong subsidiary incurred losses for Hong Kong profits tax purposes. Therefore,
no
provision for current tax has been made for the years ended
December
31,
2016
and
2015.
As of
December
31,
2016
and
2015,
the Company has operating losses carry forward in respect of Hong Kong subsidiaries of
HK$1,232,000
(US$160,000)
and
HK$934,000,
respectively.
 
Recognized deferred tax assets (liabilities) comprised of the following:
 
 
 
As of December 31,
 
 
 
2016
 
 
2016
 
  
2015
  
 
 
US$’000
 
 
HK$’000
 
  
HK$’000
  
                         
Taxable temporary differences in respect of property, plant and equipment
    
(3
)
    
(23
)
    
(11
)
Operating losses carry forward
    
26
      
203
      
154
  
Valuation allowance (Note)
    
(23
)
    
(180
)
    
(143
)
                         
Net deferred tax liabilities
 
 
-
 
 
 
-
 
    
-
  
 
Note:
 Valuation allowance was made for deferred tax (liabilities) assets arisen from tax benefit in respect of deductible temporary differences amounting to
HK$136,000
 
(US$17,000)
 and
HK$67,000
as of
December
31,
2016
and
2015,
respectively and tax losses carried forward amounting to
HK$1,232,000
(US$158,000)
 and
HK$934
,000
as of
December
31,
2016
and
2015,
respectively, as it is more likely than not that the assets will not be realized. The net change in valuation allowance for the year ended
December
31,
2016
and
2015
was an increase of
HK38,000
(US$5,000)
 and
HK$44
,000,
respectively.