Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 84

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 84
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 ourselves
in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our operations. Even
if we are successful in our attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws and
regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various
parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages
and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation
of licenses to conduct business.

We may face tax liabilities for historical reporting errors.

In the ordinary course of
our business, we are subject to complex income tax and other tax regulations, and significant judgment is required in the determination
of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities successfully challenge
our position and we are required to pay tax, interest and penalties in excess of our tax provisions, our financial condition and results
of operations would be materially and adversely affected.

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

Under the PRC Enterprise
Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body”
within the PRC 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 State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, 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 applies only to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those
controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how
the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
According to SAT Circular 82, an offshore incorporated enterprise controlled