Company: GURE
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001193805-25-001627
Chunk: 36

Company: GULF RESOURCES, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 36
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-owned enterprises
(“FIE”), SYCI, DCHC, and SHSI are incorporated in the PRC and are subject to PRC Local Income Tax Law. The PRC tax losses
may be carried forward to be utilized against future taxable profit for ten years for High-tech enterprises and small and medium-sized
enterprises of science and technology and for five years for other companies. Tax losses of the operating subsidiaries of the Company
may be carried forward for five years.

On February 22, 2008, the Ministry of Finance
(“MOF”) and the State Administration of Taxation (“SAT”) jointly issued Cai Shui [2008] Circular 1 (“Circular
1”). According to Article 4 of Circular 1, distributions of accumulated profits earned by a FIE prior to January 1, 2008 to foreign
investor(s) in 2008 will be exempted from withholding tax (“WHT”) while distribution of the profit earned by an FIE after
January 1, 2008 to its foreign investor(s) shall be subject to WHT at 10% effective tax rate.

As of September 30, 2025 and December 31, 2024,
the accumulated distributable earnings under the Generally Accepted Accounting Principles (GAAP”) of PRC that are subject to WHT
are $12,985,585 and $40,524,183, respectively. Since the Company intends to reinvest its earnings to further expand its businesses in
mainland China, its foreign invested enterprises do not intend to declare dividends to their immediate foreign holding companies in the
foreseeable future. Accordingly, as of September 30, 2025 and December 31, 2024, the Company has not recorded any WHT on the cumulative
amount of distributable retained earnings of its foreign invested enterprises that are subject to WHT in China. As of September 30, 2025
and December 31, 2024, the unrecognized WHT are $0 and $1,078,743, respectively.

The Company’s income tax returns are subject
to the various tax authorities’ examination. The federal, state and local authorities of the United States may examine the Company’s
income tax returns filed in the United States for three years from the date of filing. The Company’s US income tax returns since
2016 are currently subject to examination.

Inland Revenue Department of Hong Kong (“IRD”)
may examine the Company’s income tax returns