Company: OCG
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043484
Chunk: 142

Company: Oriental Culture Holding LTD
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 142
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 for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly
period end date while the warrants are outstanding.

For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the
time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required
to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

Value added taxes (“ VAT”)

Revenue is the invoiced value of services, net
of VAT. The VAT is based on the gross sales price and VAT rates range up to6%, depending on the type of services provided. Entities that
are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. The net VAT
balance between input VAT and output VAT is recorded in taxes payable or other receivables and prepaid expenses. All VAT returns filed
by the Company’s subsidy, VIE and its subsidiaries in China, have been and remain subject to examination by the tax authorities
for five years from the date of filing.

Income taxes

The Company accounts for income taxes in accordance
with FASB ASC Topic 740, “ Income Taxes.” Under the asset and liability method as required by this accounting standard, deferred
income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the income
tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred
taxes.

The charge for taxation is based on the results
for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.

Deferred taxes are accounted for using the asset
and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities
in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax. Deferred tax liabilities
are recognized for all future taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that
taxable income will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax