Company: SCAG
Filing Date: 2025-11-12
Form Type: 20-F
Source: 0001213900-25-109190
Chunk: 48

Company: Scage Future
Filing Date: 2025-11-12
Form: 20-F
Item: Item 3
Chunk 48
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will be subject to PRC individual income tax. The PRC Subsidiaries have obligations to file documents related to employee share options
or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share
options or are granted restricted share. If our employees fail to pay or we fail to withhold their income taxes according to relevant
laws and regulations, we may face fines or penalties imposed by the tax authorities or other PRC government authorities.

If we are classified as a PRC resident
enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders
or warrant holders.

Under the PRC Enterprise
Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body”
within China is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income
at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and
substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009,
the SAT issued the Circular Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises
on the Basis of De Facto Management Bodies (the “ SAT Circular 82”) (certain articles of which were repealed by the SAT on
December 29, 2017), which provides certain specific criteria for determining whether the “de facto management body”
of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore
enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the
criteria set forth in the circular may reflect SAT’s general position on how the “de facto management body” test should
be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated
enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de
facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following
conditions are met: (1) the primary location of the day-to-day operational management is in China; (2) decisions
relating to the enterprise’s financial and human resource matters