Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 202

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 10
Chunk 202
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 “domicile” may be interpreted under the EIT Law, and it may be interpreted as the
jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes,
any dividends we pay to our overseas shareholders which are non-resident enterprises as well as gains realized by such shareholders from
the transfer of our shares may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of
up to 10%. See “ Risk Factors - Risks Related to Doing Business in China - Under the EIT 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.”

Currently,
as a resident enterprise in the PRC, Galaxy HR (SZ) is subject to the enterprise income tax at the rate of 25%, except that once an enterprise
meets certain requirements and is identified as a small-scale minimal profit enterprise, the part of its taxable income not more than
RMB1 million is subject to a reduced rate of 5% and the part between RMB1 million and 3 million is subject to a reduced rate of 10%.
The EIT is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. If the PRC
tax authorities determine that the Company is a PRC resident enterprise for enterprise income tax purposes, we would be required to withhold
a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises and we would be subject to the PRC
enterprise income tax on our worldwide income at the rate of 25%. In addition, non-resident enterprise shareholders may be subject to
a 10% PRC withholding tax on gains realized on the sale or other disposition of our Ordinary Shares, if such income is treated as sourced
from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains
obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were
to apply to dividends or gains realized by non-PRC individuals, it would generally apply at a rate of 20% unless a reduced rate is available
under an applicable tax treaty. However, it is also unclear whether our non-PR