Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 97

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 97
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 governmental authorities. This could
affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

In response to the persistent
capital outflow and the RMB’s depreciation against U.S. the dollar, the People’s Bank of China and the SAFE have implemented
a series of capital control measures, including stricter vetting procedures for China-based companies to remit foreign currency for overseas
acquisitions, dividend payments and shareholder loan repayments. For instance, the People’s Bank of China issued the Circular on
Further Clarification of Relevant Matters Relating to offshore RMB Loans Provided by Domestic Enterprises, or the PBOC Circular 306,
on November 22, 2016, which provides that offshore RMB loans provided by a domestic enterprise to offshore enterprises that it holds
equity interests in shall not exceed 30% of the domestic enterprise’s ownership interest in the offshore enterprise. The PBOC Circular
306 may constrain WFOE’ ability to provide offshore loans to us. The PRC government may continue to strengthen its capital controls
and WFOE’s dividends and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability
of WFOE to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments
or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Under the Enterprise Income
Tax Law and related regulations, dividends, interests, rent or royalties payable by a foreign invested enterprise, such as WFOE, to any
of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets
(after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction
of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. Undistributed profits earned by foreign-invested
enterprises prior to January 1, 2008 are exempted from any withholding tax. The Cayman Islands, where our Company is incorporated, does
not have such a tax treaty with China. Hong Kong has a tax arrangement with China that provides for a 5% withholding tax on dividends
subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the
PRC enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends
and be a