Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 121

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 4
Chunk 121
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13, 2015 and partially annulled in December 30, 2019, the foreign exchange
registration under domestic direct investment and the foreign exchange registration under overseas direct investment is directly reviewed
and handled by banks in accordance with the SAFE Notice 13, and the SAFE and its branches shall perform indirect regulation over the foreign
exchange registration via banks.

Dividend Distribution

According to the PRC Company
Law and Foreign Investment Law, our PRC subsidiary, as a foreign-invested enterprise, or FIE, are required to draw 10% of its after-tax
profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common
reserve has already accounted for over 50% of its registered capital. The reserve funds are not distributable as cash dividends.

Pursuant to the EIT Law,
non-resident enterprises which have not set up agencies or offices in the PRC, or agencies or offices are set up but there is no actual
relationship with the income obtained by the agencies or offices, shall pay enterprise income tax in relation to the income originating
from China at the tax rate of 20%. However, the Implementation Rules reduced the rate from 20% to 10%.

The PRC and the government
of Hong Kong signed Arrangement between the Mainland China and Hong Kong for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (the “ Arrangement”) on August 21, 2006. According to the Arrangement, no more than
5% withholding tax rate applies to dividends paid by a PRC company to a Hong Kong resident, provided that the recipient is a company that
holds at least 25% of the capital of the PRC company. The Notice on Issues relating to the Administration of the Dividend Provision in
Tax Treaties (the “ Notice 81”) was promulgated on February 20, 2009 by the State Administration of Taxation. The Notice 81
reaffirms the qualification for a dividend recipient to enjoy a tax preferential levied at 5% rate as follows: (1) the recipient of the
dividend must be a corporation; (2) the recipient ’s ownership in the PRC company must meet the prescribed direct ownership thresholds
at all times during the 12 consecutive months preceding the receipt of the dividends; (3) the deal or arrangement is not mainly for the