NOTE 4 INCOME TAXES

12 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

NOTE 4 INCOME TAXES

NOTE 4 INCOME TAXES

For the years ended September 30, 2025 and 2024, the provision of income tax expense was $122,320 and $598,249, consisting of current portion of $1,953 and $406,760 and deferred portion of $120,367 and $191,489, respectively.

Japan

The Company conducts its major businesses in Japan and e-Learning, e-Communications and AUBE (“Japanese Subsidiaries”) are subject to tax in this jurisdiction. As a result of its business activities, Japanese Subsidiaries file tax returns that are subject to examination by the local tax authority.

Japanese Subsidiaries are subject to a number of income taxes, which, in aggregate, represent a statutory tax rate approximately as follows:

		Company’s assessable profit
For the years ended September 30,		Up to JPY 4 million		Up to JPY 8 million		Over JPY 8 million
2025		21.87%		23.74%		34.34%
2024		21.87%		23.74%		34.34%

Open tax years in Japan are five years. As of September 30, 2025, the Company’s earliest open tax year for Japanese income tax purposes is its fiscal year ended September 30, 2020. The Company's tax attributes from prior periods remain subject to adjustment.

The reconciliations of the Japanese statutory income tax rate and the Company’s effective income tax rate are as follows:

		Year Ended September 30, 2025		Year Ended September 30, 2024
Japanese statutory tax rate		33.80%		33.80%
Income tax difference under different tax jurisdictions		(1.18)%		5.80%
Effect of valuation allowance on deferred income tax assets		(25.17)%		(11.16)%
Non-deductible expenses		(0.45)%		1.61%
Deductible tax payments		-		(1.91)%
Other adjustments		(8.81)%		0.81%
Total		(1.81)%		28.95%

Hong Kong

Force Holdings, a direct wholly owned subsidiary of the Company in Hong Kong, is engaged in investment holding. Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit arising in Hong Kong.

No provision for the Hong Kong profits tax has been made as Force Holdings did not generate any estimated assessable profits in Hong Kong during the years ended September 30, 2025 and 2024.

Open tax year in Hong Kong is seven years after the relevant year of assessment. This may be extended to ten years in the case of fraud of willful evasion of taxes. There are no provisions that govern the time limit for tax collection.

United States

Exceed World, Inc., which acts as a holding company on a non-consolidated basis, does not plan to engage any business activities and current or future loss will be fully allowed. For the years ended September 30, 2025 and 2024, Exceed World, Inc., as a holding company registered in the state of Delaware, has incurred net loss and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry forward has been fully reserved.

The Company is a Delaware corporation that is subject to U.S. corporate income tax on its taxable income at a rate of up to 21% for taxable years beginning after December 31, 2017. Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “2017 Act”), was signed into law on December 22, 2017. The 2017 Act significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years or in a single lump sum.

The 2017 Act also includes provisions for a new tax on the Global Intangible Low-taxed Income (“GILTI”) effective for tax years of foreign corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations (“CFCs”), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations. The Company elected to account for GILTI tax in the period the tax is incurred, and no provision is made during the years ended September 30, 2025 and 2024.

To the extent that portions of the Company’s U.S. taxable income, such as Subpart F income or GILTI, are determined to be from sources outside of the U.S., subject to certain limitations, the Company may be able to claim foreign tax credits to offset its U.S. income tax liabilities. If dividends that the Company receives from its subsidiaries are determined to be from sources outside of the U.S., subject to certain limitations, the Company will generally not be required to pay U.S. corporate income tax on those dividends. Any liabilities for U.S. corporate income tax will be accrued in the Company’s consolidated statements of operations and comprehensive income (loss) and estimated tax payments will be made when required by U.S. law.

As of September 30, 2025, the Company’s earliest open tax year for U.S. federal income tax purposes is its fiscal year ended September 30, 2022. The Company's tax attributes from prior periods remain subject to adjustment. Open tax years in state and foreign jurisdictions generally range from three to six years.

Accounting for Uncertainty in Income Taxes

The tax authority within the jurisdiction of each of the Company’s subsidiaries conducts periodic and ad hoc tax filing reviews on business enterprises operating within that jurisdiction after those enterprises complete their relevant tax filings. Therefore, the Company’s subsidiaries’ tax filings results are subject to change. It is therefore uncertain as to whether the tax authorities may take different views about the Company’s subsidiaries’ tax filings, which may lead to additional tax liabilities.

ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of September 30, 2025 and 2024.