Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 318

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 318
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 factors including the Company’s operating
history, accumulated deficit, existence of taxable temporary differences and reversal periods.

F-104

24. INCOME TAX(cont.)

As of December 31, 2021, 2022 and 2023, the
valuation allowances of RMB87,212,118, RMB52,114,383and RMB49,257,980were related to the deferred income tax assets of the PRC entities
which were in loss position. Since these entities have incurred accumulated net operating losses for income tax purposes since their inception,
all deferred tax assets of the Company are recognized and a valuation allowance is recognized to the extent that it is more likely than
not that the deferred tax assets will not be realized as of December 31, 2021, 2022 and 2023.

Changes in valuation allowance are as follows:

                                            As                                                                                        
                                            of December 31,                                                                           
                                            2021                                   2022                        2023                   
                                            RMB                                    RMB                         RMB                    
 ──────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Balance at the beginning of the year                            107,742,954                  87,212,118                52,114,383   
  Decreases                                                      ( 20,529,430                ( 17,998,241                ( 2,856,403  
  Disposal                                                                  -                ( 17,092,747                -            
  Expired during year                                                 ( 1,406                     ( 6,747                -            
  Balance at the end of the year                                   87,212,118                  52,114,383                49,257,980   

c) Uncertain Tax Positions

The benefits of uncertain tax positions are recorded
in the Company’s consolidated financial statements only after determining a more-likely-than-not probability that the uncertain
tax positions will sustain, if examined by taxing authorities.

As of December 31, 2021, 2022 and 2023, the
amounts of unrecognized tax benefits were nil, RMB3.4million and nilrespectively, which would affect the Company’s effective income
tax rate.

F-105

24. INCOME TAX(cont.)

A reconciliation of unrecognized tax benefits from continuing operations
is as follows:

                                                    As                                                                   
                                                    of December 31,                                                      
                                                    2021                 2022                     2023                   
                                                    RMB                  RMB