Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 31

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 31
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 to adopt additional incentive plans for our directors, executive officers and employees under PRC law. See “ Regulations - 
Regulations of People’s Republic of China - Employee Stock Incentive Plan.”

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If we are classified as a PRC resident enterprise
for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

Under the PRC Enterprise Income Tax Law and its implementation
rules, an enterprise established outside of the PRC with a “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 over and overall management of the
business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued
a circular, known as 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 only applies to offshore enterprises
controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the criteria set
forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management
body” test should be applied in determining the tax resident status of all offshore enterprises. According to 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 members or senior executives habitually reside in the PRC.

We believe none of our entities outside of China is
a PRC resident enterprise for PRC tax purposes.