NOTE 8 - INCOME TAXES
The Company and its subsidiaries file separate income tax returns.
The United States of America
Weyland Tech, Inc. is incorporated in the State of Delaware in the U.S., and is subject to a gradual U.S. federal corporate income tax of 15% to 35%. The Company generated taxable income for the year ended December 31, 2016 and 2015, and which is subject to U.S. federal corporate income tax rate of 34%, respectively.
Hong Kong
Weyland Tech Limited is incorporated in Hong Kong and Hong Kong’s profits tax rate is 16.5%. Weyland Tech Limited did not earn any income that was derived in Hong Kong for the years ended December 31, 2016 and 2015, and therefore, Weyland Tech Limited was not subject to Hong Kong profits tax.
The Company’s effective income tax rates were 34% and 39.8% for the years ended December 31, 2016 and 2015, respectively. Income tax mainly consists of foreign income tax at statutory rates and the effects of permanent and temporary differences.
| For the year ended December 31, | |||||||||||
| 2016 | 2015 | ||||||||||
| U.S. statutory tax rate | 34.0% | 34.0% | |||||||||
| Hong Kong profit tax rate | 16.5% | 16.5% | |||||||||
| Foreign income not registered in the Hong Kong | (16.5%) | (16.5%) | |||||||||
| Others | 0.0% | 5.8% | |||||||||
| Effective tax rate | 34.0% | 39.8% | |||||||||
As of December 31, 2016 and 2015, the Company has a deferred tax asset of $229,479 and nil, resulting from certain net operating losses in U.S., respectively. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those net operating losses are available. The Company considers projected future taxable income and tax planning strategies in making its assessment. At present, the Company concludes that it is more-likely-than-not that the Company will be able to realize all of its tax benefits in the near future and therefore a valuation allowance has been provided for the full value of the deferred tax asset. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance. As of December 31, 2016 and 2015, the valuation allowance was $714,964 and nil, respectively. $714,964 and nil of increase in the valuation allowance for each of the years ended December 31, 2016 and 2015, respectively.
| As of December 31, | |||||||
| 2016 | 2015 | ||||||
| Deferred tax asset from operating losses carry-forwards | $ | 944,443 | $ | - | |||
| Valuation allowance | (714,964) | - | |||||
| Deferred tax asset, net | $ | 229,479 | $ | - | |||