Company: YSXT
Filing Date: 2025-07-31
Form Type: 20-F
Source: 0001410578-25-001545
Chunk: 167

Company: YSX Tech Co., Ltd
Filing Date: 2025-07-31
Form: 20-F
Item: Item 8
Chunk 167
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 with the VIE Agreements. Pursuant to the EIT Law and its implementation rules and relevant regulations, any dividends paid by WFOE to YSX HK will be subject to a withholding tax rate of 10%. However, if YSX HK is determined by the relevant PRC tax authority to have satisfied the relevant conditions and requirements under Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends YSX HK receives from WFOE may be reduced to 5%. See “ Item 3. Key Information - D. Risk Factors - Risks Relating to Doing Business in the PRC - There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of WFOE, and dividends payable by WFOE to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.”

Current PRC regulations permit our indirect PRC subsidiary, WFOE, to pay dividends to YSX HK, only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, WFOE is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in the PRC is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares.

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies, without prior approval of SAFE, by complying with certain procedural requirements. Specifically, without prior approval of SAFE, cash generated from the operations in PRC may be used to pay dividends to our Company.

B. Significant Changes

Except