Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 84

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 84
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 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 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: (i) the primary location of the day-to-day operational
management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject
to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records,
company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board customers
or senior executives habitually reside in the PRC.

We believe none of our entities
outside of China is a PRC resident