v3.26.1
Taxes
 12 Months Ended
Dec. 31, 2025
Taxes [Abstract]  
TAXES
14.TAXES

 

BVI

 

The Company and Cre8 Investments Limited is incorporated in the BVI and is not subject to tax on income or capital gains under current BVI laws. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.

 

Hong Kong

 

Cre8 Hong Kong is incorporated in Hong Kong and subject to Hong Kong Profits Tax on the taxable income as reported in its statutory consolidated financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong. From year of assessment of 2019/2020 onwards, Hong Kong profits tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. Under Hong Kong tax laws, Cre8 Hong Kong is exempted from income tax on its foreign-derived income, and there are no withholding taxes in Hong Kong on remittance of dividends.

 

PRC

 

Chuangbafang is governed by the income tax laws of the PRC. Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for all domestic enterprises and foreign invested enterprises is 25%. In January 2019, the State Administration of Taxation provides a preferential corporate income tax rate of 20% and an exemption ranged from 50% to 75% in the assessable taxable profits for entities qualified as small-size enterprises (the exemption range has been changed to from 50% to 87.5% for the period from January 1, 2021 to December 31, 2023, then the exemption range has been changed to from 75% to 87.5% for the period from January 1, 2023 to December 31, 2024). The policy is effective for the period from January 1, 2019 to December 31, 2025.

Significant components of the provision for income taxes are as follows:

 

   For the years ended December 31, 
   2023   2024   2025   2025 
   HK$   HK$   HK$   US$ 
Hong Kong profit tax                
Current tax expenses:                
Provision for the year   
—
    909,153    1,697,670    218,117 
Under provision in prior years   
—
    
—
    21,517    2,764 
    
—
    909,153    1,719,187    220,881 
                     
Deferred tax expenses (credit)   1,500,878    1,220,451    (91,278)   (11,727)
Total   1,500,878    2,129,604    1,627,909    209,154 

 

The Company’s effective tax rates were as follows:

 

   For the years ended December 31, 
   2023   2024   2025 
   HK$       HK$       HK$   US$     
Income before income tax expenses  9,283,728       8,532,487       6,905,269   887,190     
                             
Income tax rate in the BVI, permanent tax holiday   
—
    0.0%   
—
    0.0%   
—
    
—
    0.0%
Hong Kong statutory income tax rate   1,531,815    16.5%   1,411,183    16.5%   1,139,366    146,386    16.5%
Effect of different tax rates available to different jurisdictions   
—
    

0.0

%   (333,552)   (3.9)%   (111,808)   (14,365)   (1.6)%
Effect of non-taxable income   
—
    

0.0

%   (8,553)   (0.1)%   (4,561)   (586)   (0.1)%
Effect of valuation allowance   
—
    

0.0

%   1,060,526    12.4%   886,554    113,905    12.9%
Effect of non-deductible expenses   (30,937)   (0.3)%   
—
    

0.0

%   96,303    12,373    1.4%
Utilization of tax loss   
—
    

0.0

%   
—
    

0.0

%   (231,462)   (29,738)   (3.4)%
Tax concession   
—
    

0.0

%   
—
    

0.0

%   (168,000)   (21,585)   (2.4)%
Under provision of tax in prior years   
—
    

0.0

%   
—
    

0.0

%   21,517    2,764    0.3%
Effective tax rate   1,500,878    16.2%   2,129,604    24.9%   1,627,909    209,154    23.6%

 

Deferred tax

 

The deferred tax assets which are principally comprised of acceleration of depreciation on property and equipment, allowance for expected credit losses, provision for employee benefits and net operating losses. Significant components of deferred tax were as follows:

 

   Acceleration of
depreciation on
property and
equipment		   Allowance for expected credit losses   Provision for employee benefits   Tax losses   Total   Total 
   HK$   HK$   HK$   HK$   HK$   US$ 
Balance as of January 1, 2023   898,716    
—
    
—
    2,672,794    3,571,510    458,868 
Recognized in the income statement   (29,457)   
—
    
—
    (1,471,421)   (1,500,878)   (192,833)
Balance as of December 31, 2023   869,259    
—
    
—
    1,201,373    2,070,632    266,035 
Recognized in the income statement   (42,921)   197,559    (173,716)   (147,741)   (166,819)   (21,433)
Less: valuation allowance   
—
    
—
    
—
    (1,053,632)   (1,053,632)   (135,371)
Balance as of December 31, 2024   826,338    197,559    (173,716)   
—
    850,181    109,231 
Recognized in the income statement   (119,625)   125,360    85,543    886,554    977,832    125,632 
Less: valuation allowance   
—
    
—
    
—
    (886,554)   (886,554)   (113,905)
Balance as of December 31, 2025   706,713    322,919    (88,173)   
—
    941,459    120,958 

 

The Company had losses carried forward in Chuangbafang amounting to HK$4,214,526 and HK$8,647,298 (US$1,111,007) as of December 31, 2024 and 2025, respectively. For financial reporting purposes, the amount of the net deferred tax assets in Chuangbafang has been offset by a valuation allowance due to uncertainty regarding the realization of the assets. The management evaluated position taken by the company will “more likely than not” be sustained upon examination by the appropriate tax authority. The Company believes that its income tax filing positions and deductions would be sustained and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain tax positions have been recorded.