Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 251

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 251
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 Administrative
Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version), or Bulletin 45,
which became effective in September 2011, further clarifies certain issues related to the determination of tax resident status. Bulletin
45 also specifies that when provided with a resident Chinese-controlled, offshore-incorporated enterprise’s copy of its recognition
of residential status, a payer does not need to withhold a 10% income tax when paying certain PRC-source income, such as dividends, interest
and royalties to such Chinese-controlled offshore-incorporated enterprise.

We believe that our Cayman
Islands holding company, Zerolimit Cayman, is not a PRC resident enterprise for PRC tax purposes. Zerolimit Cayman is a company incorporated
outside China. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located,
and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside
China. As such, we do not believe that our Company meets all of the conditions above or is a PRC resident enterprise for PRC tax purposes,
even if the conditions for “de facto management body” prescribed in the Circular 82 are applicable. For the same reasons,
we believe our other entities outside China are not PRC resident enterprises either. However, the tax resident status of an enterprise
is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de
facto management body.” There can be no assurance that the PRC government will ultimately take a view that is consistent with our
position and there is a risk that the PRC tax authorities may deem our Company as a PRC resident enterprise since a substantial majority
of the members of our management team are located in China, in which case we would be subject to the EIT at the rate of 25% on worldwide
income. If the PRC tax authorities determine that our Cayman Islands holding company is a “resident enterprise” for EIT purposes,
a number of unfavorable PRC tax consequences could follow.

If the PRC tax authorities
determine that Zerolimit Cayman is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10%
withholding tax from dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise
shareholders from transferring our Ordinary