Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 69

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 69
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 State Administration of Taxation on April 22, 2009 regarding the standards used to classify
certain Chinese-invested enterprises established outside of China as resident enterprises clarified that dividends and other income paid
by such resident enterprises will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when
recognized by non-PRC enterprise shareholders. This recent circular also subjects such resident enterprises to various reporting requirements
with the PRC tax authorities. Under the implementation rules to the Enterprise Income Tax Law, a de facto management body is defined as
a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources,
finances and other assets of an enterprise. In addition, the tax circular mentioned above details that certain Chinese-invested enterprises
will be classified as resident enterprises if the following are located or resident in China: senior management personnel and departments
that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting
books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors
having voting rights.

Currently, there are no detailed
rules or precedents governing the procedures and specific criteria for determining de facto management bodies which are applicable to
our Company or our overseas subsidiaries. We do not believe that we meet all of the conditions required for PRC resident enterprise. The
Company is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries,
and its key assets are located, and its records (including the resolutions of its Board and the resolutions of its shareholders) are maintained,
outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However,
the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect
to the interpretation of the term “de facto management body”. There can be no assurance that the PRC government will ultimately
take a view that is consistent with ours.

However, if the PRC tax authorities
determine that we are a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax
from dividends we pay to our shareholders that are non-resident enterprises. Such a 10% tax rate could be reduced by applicable tax treaties
or similar arrangements between China and the