Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 150

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 18
Chunk 150
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The Company operates through the PRC entities and the valuation allowance is considered on each individual basis.

The Company’s assessment is that it is not more likely than not that these deferred tax assets will be realized.

The net operating loss attributable to those PRC entities can only be carried forward for a maximum period of five years. Tax losses of Macau entities can be carried forward for three years and tax losses of other non-PRCentities can be carried forward indefinitely.

Under the PRC Income Tax Law and the implementation rules, profits of the PRC entities earned on or after January 1, 2008 and distributed by the PRC entities to the Company are subject to a withholding tax at a rate of10%, unless the Company will be deemed as a resident enterprise for tax purposes. Since the Company intends to reinvest the earnings of the PRC entities in operations in the PRC, the PRC entities do not intend to declare dividends to their immediate non-PRCestablished holding companies in the foreseeable future. Accordingly, no deferred taxation on undistributed earnings of the PRC entities has been recognized as of March 31, 2025.

The Company has adopted the provisions of ASC 740 on April 1, 2007. The evaluation of a tax position in accordance with ASC 740 begins with a determination as to whether it is more-likely-than-notthat a tax position will be sustained upon examination based on the technical merits of the position. A tax position that meets the more-likely-than-notrecognition threshold is then measured at the largest amount of benefit that if greater than50percent likely of being realized upon ultimate settlement for recognition in the financial statements. The Company classifies interest and/or penalties related to unrecognized tax benefits as a component of income tax provisions; however, as of March 31, 2024 and 2025, there is no interest and penalties related to uncertain tax positions.

F-18

Table of Contents

DESWELL INDUSTRIES, INC.

8. Income Taxes(cont.)

A reconciliation of the beginning and ending amount of total unrecognized tax benefits is as follows:

                                                                 Year ended March 31,                                                    
                                                                 2023                                 2024               2025            
 ─────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Balance at the beginning of the year                           $                         1,232      $         806      $          925  
  (Decrease) increase related