Company: ZDAN
Filing Date: 2025-07-28
Form Type: F-1/A
Source: 0001683168-25-005450
Chunk: 252

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-07-28
Form: F-1/A
Chunk 252
---
 amount and the date
on which the withholding obligation arises.

Specifically, Circular 37
provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in instalments, the
instalments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld
must then be computed and withheld.

There is uncertainty as to
the application of Circular 7 and Circular 37. Circular 7 and Circular 37 may be determined by the PRC tax authorities to be applicable
to transfers of our shares that involve non-resident investors, if any of such transactions were determined by the tax authorities to
lack a reasonable commercial purpose.

As a result, we and our non-resident
investors in such transactions may become at risk of being taxed under Circular 7 and Circular 37, and we may be required to comply with
Circular 7 and Circular 37 or to establish that we should not be taxed under the general anti-avoidance rule of the EIT Law. This
process may be costly and have a material adverse effect on our financial condition and results of operations.

Value-added Tax

Under the Circular on Comprehensively
Promoting the Pilot Program of the Collection of Value-added Tax to Replace Business Tax, or “Circular 36,” which was promulgated
by the Ministry of Finance and the SAT on March 23, 2016, became effective on May 1, 2016 and as amended on July 1, 2017,
January 1, 2018 and April 1, 2019, entities and individuals engaging in the sale of services, intangible assets or fixed assets within
the territory of the PRC are required to pay value added tax, or “VAT,” instead of business tax.

According to the Circular
36, our mainland China subsidiary, the VIE and its subsidiary are subject to VAT, at a rate of 6% to 17% on proceeds received from customers
and are entitled to a refund for VAT already paid or borne on the goods purchased by it and utilized in the production of goods or provisions
of services that have generated the gross sales proceeds.

According to the Circular
of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates, promulgated on April 4, 2018 and effective since May 1,
2018, where a taxpayer engages in a taxable sales activity for the