Company: ZLAB
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001628280-25-008409
Chunk: 45

Company: Zai Lab Ltd
Filing Date: 2025-02-27
Form: 10-K
Item: Item 16
Chunk 45
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, 2024 and 2023, the Company determined that the deferred tax assets on temporary differences and net operating loss carry forwards related to certain subsidiaries will not be realized, and as such it has fully provided the corresponding valuation allowance.The following table presents that movement of the valuation allowance on deferred tax assets ($ in thousands): 20242023Balance as of January 1,(357,956)(284,072)Additions(36,822)(73,884)Balance as of December 31,(394,778)(357,956)As of December 31, 2024 and 2023, the Company had net operating loss carry forwards of $1,951.5 million and $1,804.9 million, respectively. As of December 31, 2024, net operating losses were primarily comprised of: $1,497.0 million derived from a certain entity in mainland China which expires in years 2025 through 2034;  $83.6 million derived from other entities in mainland China which expire in years 2025 through 2029; $2.5 million derived from Taiwan which expires in years 2025 through 2034; and $57.7 million, $306.9 million, and $3.8 million derived from Hong Kong, the United States, and Australia, respectively, that have indefinite carryforwards. Net operating loss carryforwards in mainland China and Taiwan expire through 2034 and those in Hong Kong, the United States, and Australia do not expire.Uncertainties exist with respect to how the current income tax law in mainland China applies to the Company’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying 

F-26

Zai Lab LimitedNotes to the Consolidated Financial StatementsFor the Years Ended December 31, 2024, 2023, and 2022

that legal entities organized outside of mainland China will be considered residents for Chinese income tax purposes if the place of effective management or control is within mainland China. The implementation rules to the EIT Law provide that non-resident legal entities will be considered Chinese residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, and properties occurs within mainland China. Despite the present uncertainties resulting from the limited Chinese tax guidance on the issue, the Company does not believe that the legal entities organized outside of mainland China within the Company should be treated as residents for EIT Law purposes. If the