Company: ZDAN
Filing Date: 2025-06-30
Form Type: F-1
Source: 0001683168-25-004840
Chunk: 254

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-06-30
Form: F-1
Chunk 254
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 from PRC territories;              |
| · | the function performed and risks assumed by the offshore holding company                                                           
 are insufficient to substantiate its corporate existence; or                                                                       |
| · | the foreign income tax imposed on the indirect transfer is lower than                                                              
 the PRC tax imposed on the direct transfer of the PRC taxable properties.                                                          |

On October 17, 2017,
the SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or Circular 37,
which took effect on December 1, 2017. Circular 37 purports to provide further clarifications by setting forth the definitions of
equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of the withholding amount and the date
on which the withholding obligation arises.

Specifically, Circular 37
provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in instalments,
the instalments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld
must then be computed and withheld.

There is uncertainty as
to the application of Circular 7 and Circular 37. Circular 7 and Circular 37 may be determined by the PRC tax authorities to be applicable
to transfers of our shares that involve non-resident investors, if any of such transactions were determined by the tax authorities to
lack a reasonable commercial purpose.

As a result, we and our
non-resident investors in such transactions may become at risk of being taxed under Circular 7 and Circular 37, and we may be required
to comply with Circular 7 and Circular 37 or to establish that we should not be taxed under the general anti-avoidance rule of the
EIT Law. This process may be costly and have a material adverse effect on our financial condition and results of operations.

Value-added Tax

Under the Circular on Comprehensively
Promoting the Pilot Program of the Collection of Value-added Tax to Replace Business Tax, or Circular 36, which was promulgated by the
Ministry of Finance and the SAT on March 23, 2016, became effective on May 1, 2016 and as amended on July 1, 2017, January
1, 2018 and April 1, 2019, entities and individuals engaging in the sale of services, intangible assets or fixed assets within the