Note 14 - Taxation

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14. Taxation

As of June 30, 2021 and December 31, 2020, taxes payable consists of:

	June 30, 2021		December 31, 2020
	US$(’000)		US$(’000)
	(Unaudited)
Turnover tax and surcharge payable		1,313		1,353
Enterprise income tax payable		2,095		2,077
Total taxes payable		3,408		3,430

For the six and three months ended June 30, 2021 and 2020, the Company’s income tax benefit/(expenses) consisted of:

	Six Months Ended June 30,					Three Months Ended June 30,
	2021		2020			2021		2020
	US$(’000)		US$(’000)			US$(’000)		US$(’000)
	(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Current		-		(57	)		-		26
Deferred		40		(11	)		22		(16	)
Income tax benefit/(expenses)		40		(68	)		22		10

The Company’s deferred tax assets as of June 30, 2021 and December 31, 2020 were as follows:

	June 30, 2021			December 31, 2020
	US$(’000)			US$(’000)
	(Unaudited)
Tax effect of net operating losses carried forward		12,160			10,123
Operating lease cost		16			-
Bad debts provision		331			728
Valuation allowance		(11,855	)		(10,245	)
Deferred tax assets, net		652			606

The U.S. holding company has incurred aggregate NOLs of approximately US$30.4 million and US$23.3 million as of June 30, 2021 and December 31, 2020, 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$24.3 million and US$22.5 million as of June 30, 2021 and December 31, 2020, respectively. The losses carryforwards gradually expire over time, the last of which expires in 2031 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$11.9 million and US$10.2 million valuation allowance as of June 30, 2021 and December 31, 2020, 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 six and three months ended June 30, 2021, the Company recorded approximately US$1.96 million and US$1.65 million deferred tax valuation allowance, respectively. For the six and three months ended June 30, 2020, the Company recorded approximately US$0.76 million and US$0.21 million deferred tax valuation allowance, respectively.