Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 204

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 10
Chunk 204
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 the Circular of Full Implementation of Business Tax to VAT Reform (the “ Circular
36”), which confirms that business tax will be completely replaced by VAT from May 1, 2016. The Notice of the MOF and the SAT on
the Adjustment to VAT Rates, promulgated on April 4, 2018 and effective as of May 1, 2018, adjusted the applicative rate of VAT. The
deduction rates of 17% and 11% applicable to the taxpayers who have VAT taxable sales activities or imported goods are adjusted to 16%
and 10%, respectively. For the export goods to which a tax rate of 17% was originally applicable and the export rebate rate was 17%,
the export rebate rate is adjusted to 16%. For the export goods and cross-border taxable activities to which a tax rate of 11% was originally
applicable and the export rebate rate was 11%, the export rebate rate is adjusted to 10%. Pursuant to such circular, the Value Added
Tax Pilot Program has been applicable nationwide since May 1, 2016.

Subsequently,
the Notice on Policies for Deepening Reform of Value-added Tax was issued by the SAT, the MOF and the General Administration of Customs
on March 30, 2019 and took effective on April 1, 2019, which further adjusted the applicable tax rate for taxpayers making VAT taxable
sales or importing goods. The applicable tax rates shall be adjusted from 16% to 13% and from 10% to 9%, respectively.

According
to the VAT Regulations and the related rules, as of the date of this report, as taxpayers selling services and its consolidated affiliated
entity is generally subject to 6% to 5% VAT applicable rate.

Dividend
Withholding Tax

Pursuant
to the Arrangement between Mainland China and Hong Kong for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect
to Taxes on Income effective on August 21, 2006, no more than 5% withholding tax rate applies to dividends paid by a PRC company to a
Hong Kong resident, provided that the recipient is a company that holds at least 25% of the capital of the PRC company. The 10% withholding
tax rate applies to dividends paid by a PRC company to a Hong Kong resident if the recipient is a company that holds less than 25% of
the capital of the PRC company