Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 200

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 10
Chunk 200
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 institutions in the PRC, and non-resident enterprises with income having
no substantial connection with their institutions in the PRC, pay enterprise income tax on their income obtained in the PRC at a reduced
rate of 10%.

We
are a BVI business company incorporated with limited liability in the British Virgin Islands and we gain substantial income by way of
dividends paid to us from our Hong Kong subsidiary, Galaxy Payroll (HK). The EIT Law and its implementation rules provide that China-sourced
income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will
normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor’s jurisdiction of incorporation has
a tax treaty with China that provides for a preferential tax rate or a tax exemption.

Under
the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident
enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although
the implementation rules of the EIT Law define “de facto management body” as a managing body that actually, comprehensively
manage and control the production and operation, staff, accounting, property and other aspects of an enterprise, the only official guidance
for this definition currently available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence
status of a Chinese-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign
country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although the Company does
not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a Chinese-controlled offshore
incorporated enterprise within the meaning of SAT Notice 82, in the absence of guidance specifically applicable to us, we have applied
the guidance set forth in SAT Notice 82 to evaluate the tax residence status of the Company and its subsidiaries organized outside the
PRC.

According
to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a
“de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all
of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for
daily production, operation