Company: RAYA
Filing Date: 2025-09-29
Form Type: 424B5
Source: 0001185185-25-001296
Chunk: 145

Company: Erayak Power Solution Group Inc.
Filing Date: 2025-09-29
Form: 424B5
Chunk 145
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 take other actions that could have a material adverse effect on our business, financial condition,
results of operations and prospects, as well as the Offering of the Shares.

Under the PRC 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 shareholders.

China passed the PRC Enterprise Income Tax Law,
or the EIT Law, and its implementing rules, both of which became effective on January 1, 2008, and as amended in December 2018. 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 of China 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 to offshore entities controlled by a Chinese enterprise or group. 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) its senior management in charge of daily operations reside or perform their duties mainly
in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and
properties, accounting books, corporate stamps, board and shareholder minutes are kept in China; and (iv) all of its directors with voting
rights or senior management reside in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide
income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders. Because substantially all of
our operations and senior management are located within the PRC and are expected to remain so for the foreseeable future, we may be considered
a PRC resident enterprise for enterprise income tax purposes and therefore subject to the PRC enterprise income tax at