Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 689

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1A
Chunk 689
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 its senior management in charge of daily operations
reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in
China; (iii) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China;
and (iv) at least half of its directors with voting rights or senior management often resident in China. A resident enterprise would
be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying
dividends to its non-PRC shareholders. However, it remains unclear as to whether the Notice is applicable to an offshore enterprise incorporated
by a Chinese natural person. Nor are detailed measures on imposition of tax from non-domestically incorporated resident enterprises are
available. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.

We
may be deemed to be a resident enterprise by Chinese tax authorities. If the PRC tax authorities determine that we are a “resident
enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be
subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting
obligations. In our case, this would mean that income such as interest on financing proceeds and non-China source income would be subject
to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from
our PRC subsidiaries would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject to
a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance
with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income
tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification
could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect
to gains derived by our non-PRC stockholders from transferring our shares.

If
we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the