Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 137

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 10
Chunk 137
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 shares, nor does the BVI levy any capital gains or income taxes on us. Further, a holder of our common shares
who is not a tax resident of the BVI is exempt from the BVI income tax on dividends paid with respect to the common shares. Holders of
common shares are not subject to the BVI income tax on gains realized on the sale or disposition of the common shares.

Our common shares are not subject to transfer
taxes, stamp duties or similar charges in the BVI. However, as a company incorporated under the Companies Act, we are required to pay
the BVI government an annual license fee based on the number of shares we are authorized to issue.

There is no income tax treaty or convention currently
in effect between the United States and the BVI.

PRC Taxation

We are a holding company incorporated in the BVI,
which directly holds our equity interests in our PRC operating subsidiaries. The EIT Law and its implementation rules, both of which became
effective as of January 1, 2008, as amended on February 24, 2017, provide that a PRC enterprise is subject to a standard income tax rate
of 25% and China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiaries to its overseas parent, will normally
be subject to PRC withholding tax at a rate of 10%, unless there are applicable treaties between the overseas parent’s jurisdiction
of incorporation and China to reduce such rate.

The EIT Law also provides that enterprises organized
under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered
PRC resident enterprises and therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income. Its implementation
rules further define the term “de facto management body” as the management body that exercises substantial and overall management
and control over the business, personnel, accounts and properties of an enterprise. We do not consider the Company to be a PRC resident
enterprise since our management team, which exercises substantial and overall management and control over the Company and its overseas
subsidiaries, is located in the United States. If the PRC tax authorities determine that our BVI holding company is a “resident
enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. Under the EIT Law
and its implementation regulations issued by the State Council, a 10% PRC withholding tax