Company: LICN
Filing Date: 2025-01-29
Form Type: 424B5
Source: 0001213900-25-007741
Chunk: 125

Company: Lichen International Ltd
Filing Date: 2025-01-29
Form: 424B5
Chunk 125
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 be subject to an enterprise income tax rate of 25%
on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders. Because substantially
all of our operations and senior management are located within the PRC and are expected to remain so for the foreseeable future, we may
be considered a PRC resident enterprise for enterprise income tax purposes and therefore subject to the PRC enterprise income tax at the
rate of 25% on its worldwide income. However, it remains unclear as to whether the Notice is applicable to an offshore enterprise controlled
by a Chinese natural person. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.

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If the PRC tax authorities determine that we are
a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow.
First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income
tax reporting obligations. In our case, this would mean that income such as non-China source income would be subject to PRC enterprise
income tax at a rate of 25%. Currently, we do not have any non-China source income, as we conduct our sales in China. However, under the
EIT Law and its implementing rules, dividends paid to us from our PRC subsidiary would be deemed as “qualified investment income
between resident enterprises” and therefore qualify as “tax-exempt income” pursuant to clause 26 of the EIT Law. Second,
it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a
situation in which the dividends we pay with respect to our ordinary shares, or the gain our non-PRC shareholders may realize from the
transfer of our ordinary shares, may be treated as PRC-sourced income and may therefore be subject to a 10% PRC withholding tax. The EIT
Law and its implementing regulations are, however, relatively new and ambiguities exist with respect to the interpretation and identification
of PRC-sourced income, and the application and assessment of withholding taxes. If we are required under the EIT Law and its implementing
regulations to withhold PRC income tax on dividends payable to our non-PRC shareholders, or if non-PRC shareholders are required to pay
PRC income tax on gains