Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 688

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1A
Chunk 688
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 affect our business and prospects.

68

If
our PRC subsidiary or consolidated affiliated entity are found incompliant with the employment and social security, taxation, marketing,
telecommunication, or other rules of China, they may face penalties imposed by the PRC government.

Our
PRC subsidiary and consolidated affiliated entity failed to strictly comply with PRC laws and regulations to contribute towards social
insurance premium and housing fund on behalf of their employees, as required by the applicable laws and regulations. We may be required
by relevant authorities to make up the shortfall of social insurance premium and housing fund. Although we have made efforts to settle
tax payables and take compliance measures, if any PRC government authority takes the position that there is non-compliance with the taxation,
marketing, telecommunication, or other rules by our PRC subsidiary or consolidated affiliated entity, they may be exposed to penalties
from PRC government authorities, in which case the operation and financial conditions of our PRC subsidiary or consolidated affiliated
entity may be adversely affected.

Under
the Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely
result in unfavorable tax consequences to us and our non-PRC stockholders.

On
March 16, 2007, the National People’s Congress of China passed the EIT Law, and on November 28, 2007, the State Council of China
passed its implementing rules, which took effect on January 1, 2008. Under the EIT Law, an enterprise established outside of China with
“de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated
in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto
management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties”
of the enterprise.

On
April 22, 2009, the State Administration of Taxation issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment
Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice,
further interpreting the application of the EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities.
Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be
classified as a “non-domestically incorporated resident enterprise” if (i)