10. INCOME TAXES

12 Months Ended

Oct. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

10. INCOME TAXES

The local (United States) and foreign components of loss before income taxes were comprised of the following:

	Years ended October 31,
	2019			2018
Tax jurisdictions from:
– Local	$	(128,220	)	$	(116,549	)
– Foreign, representing:
Malaysia		38,106			(223,990	)
Loss before income taxes	$	(90,114	)	$	(340,539	)

Provision for income taxes consisted of the following:

	Years ended October 31,
	2019			2018
Current:
– Local	$	–		$	–
– Foreign, representing:
Malaysia		183,545			226,297
Deferred:
– Local		–			–
– Foreign		(6,338	)		(12,874	)
Income tax expense	$	177,207		$	213,423

The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. During the years presented, the Company has a number of subsidiaries that operates in different countries and is subject to tax in the jurisdictions in which it subsidiaries operate, as follows:

United States of America

PGCG is registered in the State of Nevada and is subject to United States of America tax law. As of October 31, 2019 and 2018, the operations in the United States of America incurred $1,163,399 and $1,035,179, respectively of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carry forwards begin to expire in 2031, if unutilized. As of October 31, 2019, the Company has provided for a full valuation allowance of $407,190 (2018: $362,313) against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is not likely that these assets will not be realized in the future.

The Company has adopted ASC 740-10 “Accounting for Income Taxes” and recorded a liability for an uncertain income tax position, tax penalties and any imputed interest thereon. The amount, recorded as an obligation is $135,000 at October 31, 2019 and 2018 (included in accrued liabilities and other payables) in respect of potential tax penalty of the late filing of IRS return and, if recognized, will affect the Company’s effective tax rate.

Malaysia

All of the Company’s subsidiaries operating in Malaysia are subject to the Malaysia Corporate Tax Laws at a progressive income tax rate of 18% (2019: 17%) (for Company with paid up capital not more than RM2.5 million and on the first RM 500,000 income) and 24% (2019: 24%) (on all income for Company with paid up capital more than RM2.5 million and on the remaining balance of income after the first RM500,000 income charged at 24% for Company with paid up capital not more than RM2.5 million) on the assessable income for its tax year. Any unutilized losses can be carried forward indefinitely to be utilized against income from any business source. As of October 31, 2019, the Company has provided for a full valuation allowance against the deferred tax assets of $163,702 (2018: $162,104) on the expected future tax benefits from the net operating loss carry forwards as the management believes it is not likely that these assets will be realized in the future.

A reconciliation of loss before income taxes to the effective tax rate as follows:

	Years ended October 31,
	2019			2018
Loss before income taxes	$	38,106		$	(223,990	)
Statutory income tax rate		24%			24%
Income tax at statutory tax rate		9,146			(53,758	)
Tax effect of non-deductible expenses		29,652			40,398
Tax effect of non-taxable income		672			(377	)
Tax effect of non-business source rental income		130,962			212,404
Under-provision in prior years		(292	)		554
Net operating loss		7,067			14,202
Income tax expense	$	177,207		$	213,423

During fiscals 2019 and 2018, the Company revisited the facts and circumstances and determined that rental income at “Megan Avenue” and “Le Apple” should be more appropriately taxed as a non-business source under Section 4(d) of the Income Tax Act.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of October 31, 2019 and 2018:

	As of October 31,
	2019			2018
Deferred tax assets:
Net operating loss carry forwards
- United States of America	$	407,190		$	362,313
- Malaysia		163,702			162,104
Total deferred tax assets		570,892			524,417
Less: valuation allowance		(570,892	)		(524,417	)
Deferred tax assets	$	–		$	–
Deferred tax liabilities – current
Rental concession	$	–		$	–
Deferred tax liabilities – non-current
Property, plant and equipment		1,947			1,701
Rental concession		152,306			158,349
	$	154,253		$	160,050