Company: MASK
Filing Date: 2025-12-02
Form Type: POS AM
Source: 0001185185-25-001899
Chunk: 257

Company: 3 E Network Technology Group Ltd
Filing Date: 2025-12-02
Form: POS AM
Chunk 257
---
 FINANCIAL STATEMENTS</div>

2. Summary of Significant Accounting Policies(cont.)

r) Value added tax (“VAT”)

The Group is
subject to VAT and related surcharges on revenue generated from software development services, exhibition and conference services, hardware
sales and others. The Group records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Group to suppliers.
Net VAT balance between input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets.

The VAT rate
is 3% for small-scale value-added taxpayers providing services. Since March 1, 2020, the Treasury Department in PRC has announced various
preferential tax treatment on VAT for small-scale value-added taxpayers. Taxation Announcement 2020#13 stated from March 1, 2020 to May
31, 2020, small-scale value-added taxpayers other than in Hubei province would be subject to a reduced value added tax rate of 1% on their
taxable sales that used to subject to 3% VAT. Taxation Announcement 2020#24 extended the above preferential tax policy to December 31,
2020. In 2021, Taxation Announcement 2021#11 announced that from April 1, 2021 to December 31, 2021, small-scale value-added taxpayers
with monthly sales of less than RMB150,000 will be exempt from VAT. Taxation Announcement 2022#15 stated that from April 1, 2022 to December
31, 2022, small-scale VAT taxpayers shall be exempt from VAT on taxable sales that used to subject to 3% VAT tax rate. Taxation Announcement
2023#1 stated that from January 2, 2023 to December 31, 2023, small-scale VAT taxpayers would be subject to a reduced value added tax
rate of 1% on their taxable sales that used to subject to 3% VAT.

s) Uncertain tax positions

The Group uses
a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in
a tax return. As a result, the impact of an uncertain income tax position is recognized at the largest amount that is more-likely-than-not
to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than
a 50% likelihood of being sustained.