NOTE 9 - INCOME TAXES

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


	For three months ended 31,
	2021		2020
Tax jurisdictions from:
- Local	$	(124,017)	$	(119,511)
- Foreign, representing:
BVI		(42,153)		(70,545)
HK		—		—
Thailand		(199,573)		(378,403)

Loss before income taxes	$	(365,743)	$	(568,459)

United States of America

The Company is incorporated in the State of Nevada and is subject to the U.S. federal tax and state tax. The Tax Cuts and Jobs Act of (“TCJ Act”) was signed into law in December 2017, and among its many provisions, it imposed a mandatory one-time transition tax on undistributed international earnings and reduced the U.S. corporate income tax rate to 21%, effective January 1, 2018. No provision for income taxes in the United States has been made as the Company had no taxable income for the three months ended March 31, 2021 and 2020.

British Virgin Islands

Under the current laws of the British Virgin Islands, entities incorporated in British Virgin Islands are not subject to tax on their income or capital gains.

Thailand

The statutory corporate income tax rate in Thailand (“CIT”) is 20%.

Digiwork, assuming a paid-in capital not exceeding 5 million Thai baht (THB) ($160,000) at the end of any accounting period and income from the sale of goods and/or the provision of services not exceeding THB 30 million ($960,000) in any accounting period, is subject to CIT in Thailand at the following reduced rates:


Net profit
Nil – THB300,000 ($9,600)	0	%
THB300,000 – THB3,000,000 ($96,000)	15	%
Over THB3,000,000 ($96,000)	20	%

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


	For three months ended March 31,
	2021			2020
Loss before income taxes	$	(365,743)		$	(568,459)
Statutory income tax rate %		21	%		21	%
Income tax credit computed at statutory income tax rate		(76,806)			(119,376)
Reconciling items:
Non-deductible expenses		5,425			29,713
Tax effect of tax exempt entity		8,852			14,815
Rate differential in different tax jurisdictions		1,996			3,784
Valuation allowance on deferred tax assets		60,533			71,064

Total tax expenses	$	—		$	—

(b) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of March 31, 2021 and December 31, 2020 are presented below


	March 31, 2021		December 31, 2020
Deferred tax assets:
Net operating loss carryforwards:
- United States of America	$	243,283	$	217,239
- Thailand		292,898		270,077
		536,181		487,316
Less: Valuation allowance		(536,181)		(487,316)
	$	—	$	—

The Company has accumulated net operating loss carryovers of approximately $1,158,490 and $1,034,473 as of March 31, 2021 and December 31, 2020, respectively, which are available to reduce future taxable income. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $145,660 for federal income tax reporting purposes may be subject to annual limitations. A change in ownership may limit the utilization of the net operating loss carry forwards in future years. The tax losses will begin to expire in 2035.

As of March 31, 2021, and December 31, 2020, the entities in Thailand had net operating loss carry forwards of $1,464,488 and $1,350,383, respectively, which will expire in various years through 2024.

Management believes that it is more likely than not that the Company will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future. As a result, a valuation allowance was provided against the full amount of the potential tax benefits.