Company: LICN
Filing Date: 2025-04-29
Form Type: 20-F
Source: 0001213900-25-036244
Chunk: 119

Company: Lichen International Ltd
Filing Date: 2025-04-29
Form: 20-F
Item: Item 19
Chunk 119
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 on gross sales price and VAT rates range up to13%, depending on the type of products sold or
service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output
VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by the Company’s
subsidiaries in PRC remain subject to examination by the tax authorities for five years from the date of filing.

F-17

Income taxes

The Company follows the liability method of accounting
for income taxes in accordance with ASC 740 (“ ASC 740”), Income Taxes. The Company accounts for current income taxes in accordance
with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases
of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.

The Company is not subject
to tax on income or capital gain under the current tax laws of U. S. And the Company is subject to tax on income or capital gain under
the tax laws of PRC.

An uncertain tax position is recognized as a benefit
only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized
is the largest amount of tax benefit that is greater than50% likely of being realized on examination. For tax positions not meeting the
“more likely than not” test, no tax benefit is recorded. For the years ended December 31, 2024, 2023 and 2022, no uncertain
tax position is recognized. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense
in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended December
31, 2024, 2023 and 2022. All of the tax returns of the Company’s subsidiaries in PRC remain subject to examination by the tax authorities
for five years from the date of filing.

Statutory surplus reserves

The Company’s PRC subsidiaries are required