Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 162

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 162
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 enterprise” for PRC EIT purposes, a number of unfavorable
PRC tax consequences could follow.

Under the Enterprise Income
Tax Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends paid
to investors that are nonresident enterprises, which do not have an establishment or place of business in the PRC or which have such
establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the
extent such dividends are derived from sources within the PRC.

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In addition, any gain realized
on the transfer of shares by such investors is also subject to PRC tax at a rate of 10%, if such gain is regarded as income derived from
sources within the PRC. If we are deemed to be a PRC resident enterprise, dividends paid on our Ordinary Shares, and any gain realized
from the transfer of our Ordinary Shares, may be treated as income derived from sources within the PRC and may as a result be subject
to PRC taxation.

Furthermore, if we are deemed
to be a PRC resident enterprise, dividends paid to individual investors who are non-PRC residents and any gain realized on the transfer
of Ordinary Shares by such investors may be subject to PRC tax at a current rate of 20% (which in the case of dividends may be withheld
at source). Any PRC tax liability may be reduced under applicable tax treaties or tax arrangements between China and other jurisdictions.
If we or any of our subsidiaries established outside China are considered to be a PRC resident enterprise, it is unclear whether holders
of the Ordinary Shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries
or areas.

In April 2018, the Ministry
of Finance, or MOF, and State Administration of Taxation, or SAT, jointly promulgated the Circular of the MOF and the SAT on Adjustment
of Value-Added Tax Rates, or Circular 32, according to which (i) for VAT taxable sales or imports of goods originally subject to VAT
rates of 17% and 11% respectively, such tax rates were adjusted to 16% and 10%, respectively; and (ii) for exported goods originally
subject to a tax rate of 17% and an export tax refund rate of 17%, the export tax refund rate was adjusted to 16%. Circular 32 became
effective on May