Company: NCL
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001575872-25-000540
Chunk: 23

Company: Northann Corp.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 23
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 rate benefit. An entity is a connected entity of another entity if (1) one of them has control over the other; (2) both of them are under the control (more than 50% of the issued share capital) of the same entity; (3) in the case of the first entity being a natural person carrying on a sole proprietorship business-the other entity is the same person carrying on another sole proprietorship business. Since Benchwick is wholly owned and under the control of Northann, it is a connected entity. Under the Ordinance, it is an entity’s election to nominate the entity that will be subject to the two-tier profits tax rates on its profits tax return. The election is irrevocable. The Company elected Benchwick to be subject to the two-tier profits tax rates. The provision for current income and deferred taxes of Benchwick has been calculated by applying the new tax rate of 8.25%. PRC In accordance with the relevant tax laws and regulations of the PRC, a company registered in the PRC is subject to income taxes within the PRC at the applicable tax rate on taxable income. All the PRC subsidiaries that are not entitled to any tax holiday were subject to income tax at a rate of 25% for the six months ended June 30, 2025 and 2024. According to PRC tax regulations, the PRC net operating loss can generally carry forward for no longer than five years starting from the year subsequent to the year in which the loss was incurred. Carry back of losses is not permitted. If not utilized, the PRC net operating loss will expire in 2026. The income tax expense was $nil and $2,799 for the six months ended June 30, 2025 and 2024, respectively, related primarily to the Company’s subsidiaries located outside of the U.S. Uncertain tax positions The Company did not have any uncertain tax positions during the six months ended June 30, 2025 and 2024. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by the respective jurisdictions, where applicable. The statute of limitations for the tax returns varies by jurisdictions. The amounts of uncertain tax liabilities listed above are based on the recognition and measurement criteria of ASC Topic 740, and the balance is presented as current liability in the consolidated financial statements as