4. INCOME TAXES
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 34% for the years ended December 31, 2016 and 2015. As of December 31, 2016, the Company had net operating loss carry forwards of approximately $305,785 that may be available to reduce future years’ taxable income through 2036. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. No tax benefit has been realized since a 100 % valuation allowance has offset deferred tax asset resulting from the net operating losses.
Taiwan
The subsidiary of EOS Inc. is 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 $3,660 (NT$120,000). No income tax liabilities existed as of December 31, 2016 and 2015 due to the Company’s continuing operating losses.
Provision for income tax consists of the following:
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From April 3, |
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For the Year Ended |
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(Inception) |
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December 31, |
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to December 31, |
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2016 |
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2015 |
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Current |
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U.S. |
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$ | - |
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$ | - |
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Taiwan |
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- |
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- |
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Deferred |
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U.S. |
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Deferred tax assets for NOL carryforwards |
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(52,970 | ) |
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(50,997 | ) |
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Valuation allowance |
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52,970 |
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50,997 |
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Net changes in deferred income tax under non-current portion |
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- |
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- |
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The following is a reconciliation of the statutory tax rate to the effective tax rate:
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For the Year Ended December 31, |
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From April 3, (Inception) to December 31, |
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2016 |
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2015 |
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U.S. statutory income tax rate |
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34 |
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34 |
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Foreign statutory income tax rate difference |
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(17 | ) |
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(17 | ) |
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Changes in valuation allowance |
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(17 | ) |
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(17 | ) |
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Effective income tax rate |
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0 |
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0 |
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Significant components of the Company’s deferred taxes as of December 31, 2016 and 2015 were as follows:
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December 31, |
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December 31, |
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2016 |
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2015 |
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Deferred tax assets: |
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Net operating loss carryforwards |
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$ | 103,967 |
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$ | 50,997 |
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Less: Valuation allowance |
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(103,967 | ) |
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(50,997 | ) |
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Deferred tax assets, net |
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$ | - |
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$ | - |
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