Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 89

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 4
Chunk 89
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 Labor Dispatch Permit on January 24, 2019 in PRC. Our Directors considered the costs and benefits
of engaging in-country partners as the seconded employees’ employers of record and decided that engaging in-country partners was
in the best interest of our Group and would minimize the business risks and legal risks that our Group has to bear as an employer of record.
In addition, the geographical proximity of our in-country partners with our end-users in the cities where our Group does not have presence
could facilitate the handling of administrative matters for the seconded employees. Our Directors considered that the percentage of in-country
partner costs attributable to the in-country partners to the total revenue derived from the in-country partner for employment services
during the years ended June 30, 2025, 2024 and 2023 to be relatively low. As such, with current operation scale and cost structure, our
Directors considered it more favorable for our Group to provide employment services in the PRC through in-country partners. In view of
the above, our Group does not plan to provide employment services in the PRC directly in the near future. Our Directors expect that there
will not be any major change in our cost structure for employment services due to the engagement of in-country partners in the PRC in
the near future.

When providing employment
services through our in-country partners in the PRC, the percentage of in-country partner costs attributable to our in-country partners
to the revenue derived through our in-country partners is usually lower than that for payroll outsourcing services, as our in-country
partners charge us at a fixed fee per seconded employee while we generally charge our customers by a percentage of the monthly remuneration
package.

When comparing the nature
of payroll outsourcing services and employment services, the risks that our Group has to bear when providing employment services directly
is higher than that of providing payroll outsourcing services directly, because acting as the seconded employees’ employer of record
exposes our Group to liabilities of an employer. Since the in-country partners were charging our Group at a relatively low fixed fee per
seconded employee in the PRC as compared to the fee we charged our customers per seconded employee, our Directors considered it more favorable
to continue engaging in-country partners as seconded employees’ employers of record.

As for payroll outsourcing
services, the percentage of in-country partner costs attributable to the in-country partners to the revenue derived through the in-country
partners was relatively higher, while the risk our Group would be exposed to