Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 224

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 224
---
 periods,
the Group’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established
for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on
its ability to generate sufficient taxable income within the carryforward periods provided for in the tax law.

As of September 30, 2024, the Group had tax loss carryforwards of RMB2,192, all of which nilwill expire, if unused, by 2029.

According to the PRC Tax Administration and Collection Law, the
statute of limitations isthree yearsif the underpayment of income taxes is due to computational errors made by the taxpayer. The
statute of limitations will be extended tofive yearsunder special circumstances, which are not clearly defined, but an
underpayment of income tax liability exceeding RMB100is specifically listed as a special circumstance. In the case of a transfer
pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.
The Group’s PRC subsidiaries are therefore subject to examination by the PRC tax authorities from 2019 through 2024 on
non-transfer pricing matters, and from 2013 through 2024 on transfer pricing matters.

In accordance with the EIT Law, dividends, which arise from profits
of foreign invested enterprises (“ FIEs”) earned after January 1, 2008, are subject to a10% withholding income tax. In addition,
under tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner,
the applicable withholding tax rate is reduced to5%, if the investor holds at least25% in the FIE, or10%, if the investor holds less
than25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Group
has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be
postponed indefinitely. The Group plans to indefinitely reinvest undistributed profits earned from its China subsidiaries in its operations
in the PRC. Therefore, no withholding income taxes for undistributed profits of the Group’s subsidiaries have been provided as of
September 30, 2023 and 2024.

Under applicable accounting principles, a deferred tax liability should
be recorded for taxable temporary differences attributable to the excess of financial reporting