Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 247

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 19
Chunk 247
---
14

Research and development expenses

Research and development expenses mainly consist of technology infrastructure
expenses related to platform development to support the Group’s business operations. The expenditure incurred related to development
of platform are capitalized only when the preliminary project stage is completed and it is probable that the project will be completed
and the platform will be used to perform the function intended.

Income taxes

Galaxy Payroll BVI, Melkweg
Cayman and Melkweg BVI are not subject to tax on income or capital gains under the current laws of the Cayman Islands and British Virgin
Islands respectively. In addition, upon payments of dividends by the Melkweg BVI and Galaxy Payroll (HK), Melkweg BVI to the Group’s
shareholders, no British Virgin Islands and Cayman Island withholding tax will be imposed.

Galaxy Payroll HK, Galaxy
Solutions Partner, Galaxy Payroll (China) and Galaxy Payroll (TW) are incorporated in and carry trade and business in Hong Kong Special
Administrative Region and is subject to Hong Kong profits tax under Inland Revenue Department Ordinance.

No provision for taxation
in PRC has been made as the Group’s entities in PRC had no assessable profit for the years ended June 30, 2025, 2024 and 2023.

The Group accounts for income tax in accordance with U. S. GAAP. Under
the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets
for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets
and liabilities. Income tax expense consists of taxes currently due plus deferred tax.

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 tax is charged or
credited in the statements of income/(loss), except when it is related to items credited or charged directly to equity. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

An uncertain tax position
is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a