Note 6 - Taxation

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6. TAXATION

Under current Bermuda law, the Company and its subsidiaries are not required to pay taxes in Bermuda on either income or capital gains. The Company has received an undertaking from the Bermuda government that, in the event of income or capital gains taxes being imposed, the Company will be exempted from such taxes until the year 2035.

However, Protexure which is a Delaware corporation domiciled in the state of Illinois is subject to taxation in the United States.

Estimates of future taxable income, including income generated from prudent and feasible actions and tax planning strategies could change in the near term, perhaps materially, which may require us to consider any potential impact to our assessment of the recoverability of the deferred tax asset. Such potential impact could be material to our consolidated financial condition or results of operations for an individual reporting period.

The actual income tax rate differed from the amount computed by applying the effective rate of 0% under Bermuda law to earnings before income taxes as shown in the following reconciliation:

	2021			2020
Earnings before income tax	$	(1,036,719	)	$	(13,603,715	)
Expected tax		—			—
Foreign taxes at local expected rates		6,857			38,500
Change in deferred tax asset of US subsidiary		(69,000	)		950,000
Deferred tax expense from enacted rate reductions		—			—
Change in valuation allowance		624,000			—
Net tax expense	$	561,857		$	988,500

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Management has reduced deferred tax assets by a valuation allowance as the ability of the Company to realize these benefits has not certain at this time. The components of net deferred income tax assets and liabilities are comprised of the following: 
 

	2021		2020
Capitalized start-up expenses	$	44,000	$	58,000
Operating loss carryforwards		945,000		1,483,000
Unearned commission income		50,000		61,000
Depreciation and amortization		20,000		12,000
Deferred tax assets	$	1,059,000	$	1,614,000