Note 15 - Taxation

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

15. Taxation

As of

September 30, 2020

and

December 31, 2019,

taxes payable consists of:

	September 30, 2020		December 31, 2019
	US$('000)		US$('000)
	(Unaudited)
PRC turnover tax and surcharge payable		1,280		1,244
PRC enterprise income tax payable		2,010		1,970
Total taxes payable		3,290		3,214

For the

nine

and

three

months ended

September 30, 2020

and

2019,

the Company's income tax benefit consisted of:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2020		2019		2020		2019
	US$('000)		US$('000)		US$('000)		US$('000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Current		-		-		57		-
Deferred		87		10		98		16
Income tax benefit		87		10		155		16

The Company's deferred tax assets as of

September 30, 2020

and

December 31, 2019

were as follows:

	September 30, 2020			December 31, 2019
	US$('000)			US$('000)
	(Unaudited)
Tax effect of net operating losses carried forward		10,148			9,160
Bad debts provision		890			743
Valuation allowance		(10,223	)		(9,190	)
Deferred tax assets, net		815			713

The U.S. holding company has incurred aggregate NOLs of approximately

US$22.8

million and

US$20.3

million as of

September 30, 2020

and

December 31, 2019,

respectively. The NOLs carryforwards as of

December 31, 2017

gradually expire over time, the last of which expires in

2037.

NOLs incurred after

December 31, 2017

will

no

longer be available to carry back but can be carried forward indefinitely, subject to an annual limit of

80%

on the amount of taxable income that can be offset by NOLs arising in tax years ending after

December 31, 2017.

The Company maintains a full valuation allowance against its net U.S. deferred tax assets, since due to uncertainties surrounding future utilization, the Company estimates there will

not

be sufficient future earnings to utilize its U.S. deferred tax assets.

The NOLs carried forward incurred by the Company's PRC subsidiaries and VIEs were approximately

US$25.2

million and

US$23.6

million as of

September 30, 2020

and

December 31, 2019,

respectively. The losses carryforwards gradually expire over time, the last of which expires in

2030

due to certain subsidiary enjoys the High and New Technology Enterprise's privileged NOLs carryforward policy. The related deferred tax assets were calculated based on the respective NOLs incurred by each of the PRC subsidiaries and VIEs and the respective corresponding enacted tax rate that will be in effect in the period in which the losses are expected to be utilized.

The Company recorded approximately

US$10.22

million and

US$9.19

million valuation allowance as of

September 30, 2020

and

December 31, 2019,

respectively, because it is considered more likely than

not

that a portion of the deferred tax assets will

not

be realized through sufficient future earnings of the entities to which the operating losses related.

For the

nine

and

three

months ended

September 30, 2020,

the Company recorded approximately

US$0.90

million and

US$0.14

million deferred tax valuation allowance, respectively.

For the

nine

months ended

September 30, 2019,

the Company recorded approximately

US$0.42

million deferred tax valuation allowance. For the

three

months ended

September 30, 2019,

the Company reversed approximately

US$0.03

million deferred tax valuation allowance

.