Company: OCG
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043484
Chunk: 155

Company: Oriental Culture Holding LTD
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 155
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,
because the Company controls the timing of the undistributed earnings and it is probable that such earnings will not be distributed. The
Company plans to reinvest those earnings in the PRC operations for the foreseeable future.

F-25

ORIENTAL
CULTURE HOLDING LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Moreover, the current EIT Law treats enterprises
established outside of China with “effective management and control” located in China as PRC resident enterprises for tax
purposes. The term “effective management and control” is generally defined as exercising overall management and control over
the business, personnel, accounting, properties, etc. of an enterprise. The Company, if considered a PRC resident enterprise for tax purposes,
would be subject to the PRC Enterprise Income Tax at the rate of25% on its worldwide income for the period after January 1, 2008 if the
only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions
relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel
in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions,
are located or maintained in China; and (iv) at least50% of voting board members or senior executives habitually reside in China. Based
upon a review of surrounding facts and circumstances, the Company does not believe its subsidiaries outside of China is a PRC resident
enterprise for PRC tax purposes because the rule only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise
groups, not those controlled by PRC individuals or foreigners like us, and therefore was not subject to PRC taxes.

Kashi Longrui and Kashi Dongfang were formed and
registered in Kashi in Xinjiang Province, China in 2018. These companies have received an exemption and will not be subject to income
tax for5years, which expired on December 31, 2022. As of December 31, 2024 and 2023, the Company has not recorded any deferred tax liabilities
in light of (1) its compliance with PRC EIT Law in making payments of enterprise income tax; and (2) Jiangsu Yanggu’s inability
to pay its net profits to WFOE under the VIE agreement without the Company