Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 256

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 19
Chunk 256
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  (3)      The deposits mainly represented the customers’ advance of payroll funds to ensure timely settlement of customer’s employees’ salaries and retirement benefit contributions to the relevant govern...  

F-20

Note 8 - Taxes

Cayman Island and British Virgin Islands

The Group, Melkweg Cayman
and Melkweg BVI were incorporated in the Cayman Islands and British Virgin Islands respectively and conduct all of the Group’s businesses
through subsidiaries in Hong Kong, Macau, PRC and Taiwan. Under the current laws of the Cayman Islands and British Virgin Islands, the
Group, Melkweg Cayman and Melkweg BVI are not subject to tax on income or capital gains. In addition, upon payments of dividends
by Melkweg BVI to Melkweg Cayman and Melkweg Cayman to the Group’s shareholders, no Cayman Island and British Virgin Islands withholding
tax will be imposed.

Hong Kong

Two-tier Profits Tax Rates

Galaxy Payroll (HK), Galaxy
Solutions Partner, Galaxy Payroll (China) and Galaxy Payroll (TW) were incorporated in Hong Kong and are subject to Hong Kong profits
tax compliance.

The two-tier profits tax rates
system was introduced under the Inland Revenue (Amendment)(No.3) Ordinance 2018 (“the Ordinance”) of Hong Kong became effective
for the assessment year 2018/2019. Under the two-tier profit tax rates regime, the profits tax rate for the first HKD2million of assessable
profits of a corporation will be subject to the lowered tax rate,8.25% while the remaining assessable profits will be subject to the
legacy tax rate,16.5%. The Ordinance only allows one entity within a group of “connected entities” is eligible for the two-tier
tax rate benefit. An entity is a connected entity of another entity if (1) one of them has control over the other; (2) both of them are
under the control (more than50% of the issued share capital) of the same entity; (3) in the case of the first entity being a natural
person carrying on a sole proprietorship business-the other entity is the same person carrying on another sole proprietorship business.
Under the Ordinance, it is an entity’s election to nominate an entity that will be subject to the two-tier profits tax rate on its
Profits Tax Return. The election is irrevocable.

Gal