Company: TOP
Filing Date: 2025-08-13
Form Type: 20-F
Source: 0001213900-25-075728
Chunk: 37

Company: TOP Financial Group Ltd
Filing Date: 2025-08-13
Form: 20-F
Item: Item 4A
Chunk 37
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 the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities
and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis
of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.

The charge for taxation is based on the results
for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance
sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is probable that
taxable income to be utilized with prior net operating loss carried forwards. Deferred tax is calculated using tax rates that are expected
to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement,
except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current
income taxes are provided for in accordance with the laws of the relevant taxing authorities.

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, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized
on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period
incurred.

Recent Accounting Pronouncements

A list of recently issued accounting pronouncements
that are relevant to us is included in note 2 of the consolidated financial statements included elsewhere in this report.

Holding Company Structure

TFGL is a holding company incorporated in the
Cayman Islands with no material operations of its own. We conduct our operations primarily in Hong Kong through our subsidiaries in Hong
Kong.

As a result, TFGL’s ability to pay dividends
may depend upon dividends paid by our Hong Kong subsidiaries. If our existing Hong Kong subsidiaries or any newly formed ones incur debt
on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends