INCOME TAX EXPENSE

9 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAX EXPENSE

NOTE – 12 INCOME TAX EXPENSE

For the nine months ended December 31, 2022 and 2021, the local (“United States of America”) and foreign components of income (loss) before income taxes were comprised of the following:

	Nine months ended December 31,
	2022			2021
Tax jurisdiction from:
- Local	$	(274,229	)	$	–
- Foreign, including
British Virgin Islands		(506,202	)		–
Hong Kong		(179,563	)		(94,678	)
Loss before income taxes	$	(959,994	)	$	(94,678	)

The provision for income taxes consisted of the following: 

		Nine months ended December 31,
		2022		2021
Current tax:
- Local	$	–	$	–
- Foreign		–		–
Deferred tax
- Local		–		–
- Foreign		–		–
Income tax expense	$	–	$	–

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly operates in Hong Kong that is subject to taxes in the jurisdictions in which they operate, as follows:

United States of America

KRFG is registered in the State of Delaware and is subject to tax laws of the United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented. The Company has provided for a full valuation allowance against the deferred tax assets of $95,342 as the tax losses may not be able to carry forward after a change in substantial ownership of the Company.

For the nine months ended December 31, 2022 and 2021, there were no operating income in the U.S. tax regime.

BVI

Under the current BVI law, the Company is not subject to tax on income.

Hong Kong

The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable profits arising in Hong Kong during the current period after deducting a tax concession for the tax year. The reconciliation of income tax rate to the effective income tax rate for the nine months ended December 31, 2022 and 2021 is as follows: 

	Nine months ended December 31,
	2022			2021
Income (Loss) before income taxes	$	(179,563	)	$	(94,678	)
Statutory income tax rate		16.5%			16.5%
Income tax expense at statutory rate		(29,628	)		(15,622	)
Tax effect of non-deductible items		937			–
Tax effect of non-taxable items		(2,126	)		–
Net operating income (loss)		(30,817	)		(15,622	)
Valuation allowance		30,817			15,622
Income tax expense (benefit)	$	–		$	–

The following table sets forth the significant components of the deferred tax assets and liabilities of the Company as of December 31, 2022 and March 31, 2022: 

	December 31,			March 31,
	2022			2022
Deferred tax assets:
Net operating loss carryforward, from
US tax regime	$	95,342		$	–
Hong Kong tax regime		290,955			285,609
Less: valuation allowance		(386,297	)		(285,609	)
Deferred tax assets, net	$	–		$	–

As of December 31, 2022, the operations in the United States of America incurred $454,011 of cumulative net operating losses which can be carried forward indefinitely to offset future taxable income. The Company has provided for a full valuation allowance against the deferred tax assets of $95,342 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

As of December 31, 2022, the operations in Hong Kong incurred $1,763,360 of cumulative net operating losses which can be carried forward to offset future taxable income. There is no expiry in net operating loss carryforwards under Hong Kong tax regime. the Company has provided for a full valuation allowance against the deferred tax assets of $290,955 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The Company filed income tax returns in the United States federal tax jurisdiction and the Delaware state tax jurisdiction. Since the Company is in a loss carryforward position, it is generally subject to examination by federal and state tax authority for all tax years in which a loss carryforward is available.