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

20. INCOME TAXES

 

Cayman Island

 

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Upon payment of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.

 

Samoa

 

Under the current laws of Samoa, GreenTree Samoa is not subject to tax on income or capital gain. Upon payment of dividends by the Company to its shareholders, no Samoa withholding tax will be imposed.

 

Hong Kong

 

Subsidiaries in Hong Kong are subject to Hong Kong profit tax at a rate of 16.5%, and foreign-derived income is exempted from income tax. There are no withholding taxes upon payment of dividends by the subsidiaries incorporated in Hong Kong to their shareholders.

 

Chinese mainland

 

On March 16, 2007, the PRC government promulgated the Law of the People’s Republic of China on Enterprise Income Tax (“New EIT Law”), which was effective from January 1, 2008. Under the New EIT Law, domestically-owned enterprises and foreign-invested enterprises are subject to a statutory tax rate of 25%. Enterprises qualified as “High New Technology Enterprises (“HNTEs”) enjoy a preferential income tax rate of 15%. Dividends, interest, rent or royalties and proceeds from any such assets located in the PRC (after deducting the net value of such assets) shall be subject to a 10% withholding tax.

 

Shanghai Evergreen and Shanghai Sipei are recognized as qualified HNTEs for the periods from 2023 to 2025 and enjoy a preferential tax rate of 15%.

 

Income before income taxes and share of income (losses) in equity method investments consists of:

 

   Years ended December 31, 
   2023   2024   2025   2025 
   RMB   RMB   RMB   USD 
Chinese mainland   351,791,690    176,652,452    79,927,908    11,429,539 
Others   28,580,168    20,554,343    129,309,349    18,490,991 
Total   380,371,858    197,206,795    209,237,257    29,920,530 

 

For the year ended December 31, 2025, income tax expense amounted to RMB 45,376,761(USD 6,488,791) in Chinese mainland, and income tax expense amounted to RMB 503,261(USD 71,965) in jurisdictions outside Chinese mainland. For the year ended December 31, 2025, substantially all of the income taxes paid were in Chinese mainland.

 

The current and deferred components of income tax expense appearing in the consolidated statements of comprehensive income are as follows:

 

   Years ended December 31, 
   2023   2024   2025   2025 
   RMB   RMB   RMB   USD 
Current tax   120,875,594    107,567,291    60,948,129    8,715,467 
Deferred tax   (2,423,339)   (18,840,322)   (15,068,107)   (2,154,711)
Total   118,452,255    88,726,969    45,880,022    6,560,756 

Reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: 

 

   Years ended December 31, 
   2023   2024 
PRC statutory tax rate   25%   25%
Withholding tax   3%   7%
Effect of international rate differences   (2)%   (2)%
Effect of preferential tax rate   (1)%   (8)%
Uncertain tax positions   (3)%   1%
Valuation allowances   8%   8%
Deferred tax   (1)%   2%
Provision to return   
-
    1%
Non-deductible expenses   2%   11%
Effective tax rate   31%   45%

 

   Years ended December 31, 2025 
   RMB   USD   Percent 
PRC statutory tax rate   52,309,314    7,480,132    25%
Effect of Cross-border tax laws               
Withholding tax   (786,901)   (112,525)   0%
Valuation allowances   2,323,319    332,230    1%
Nontaxable or nondeductible items               
Goodwill impairment   16,622,750    2,377,022    8%
Bad debt provision write off not filed   7,679,245    1,098,117    4%
Others   2,576,467    368,430    1%
Changes in unrecognized tax benefits   16,633,267    2,378,526    8%
Foreign tax effects               
Cayman               
Statutory tax rate difference between Cayman and China   (34,201,802)   (4,890,793)   (16)%
Other foreign jurisdictions   2,377,726    340,010    1%
Others               
Statutory income/expenses   (35,112,478)   (5,021,018)   (17)%
Effect of preferential tax rate   (9,588,668)   (1,371,161)   (5)%
Nol expired   28,162,314    4,027,157    13%
others   (3,114,531)   (445,372)   (1)%
Income tax expenses   45,880,022    6,560,756    22%

The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2024 and 2025 are as follows:

 

   As of December 31 
   2024   2025   2025 
   RMB   RMB   USD 
Deferred tax assets:            
Tax losses carryforward   125,063,028    122,740,862    17,551,710 
Allowance for accounts receivables and other current assets   10,863,499    11,621,434    1,661,843 
Allowance for non-current other assets   48,076,465    48,076,465    6,874,843 
Allowance for loans receivable   85,588,610    96,110,634    13,743,638 
Impairment of long-lived assets   13,073,472    17,392,626    2,487,112 
Lease liabilities   362,136,225    304,284,522    43,512,108 
Deferred revenue   75,722,666    66,114,264    9,454,214 
Accrued liabilities   19,542,973    18,826,160    2,692,105 
Unrealized losses from equity securities   1,638,899    2,310,404    330,383 
Investment in subsidiaries   2,775,000    3,650,000    521,943 
Valuation allowance   (165,327,438)   (167,122,474)   (23,898,195)
Total deferred tax assets   579,153,399    524,004,897    74,931,704 
Deferred tax liabilities:               
Property, plant and equipment   (2,219,319)   (1,959,639)   (280,225)
Right-of-use assets   (327,572,728)   (280,175,271)   (40,064,531)
Intangible assets arising from acquisition   (47,872,112)   (30,807,513)   (4,405,416)
Unrealized gains from equity securities   (1,805,008)   (4,396,334)   (628,667)
Investment in subsidiaries   (33,595,045)   (25,508,844)   (3,647,716)
Total deferred tax liabilities   (413,064,212)   (342,847,601)   (49,026,555)

 

As of December 31, 2025, the Group had tax losses carryforwards of RMB 490,860,337 (USD 70,206,839), mainly deriving from the entities in the PRC. The tax losses in the PRC can be carried forward for five years to offset future taxable profit and which will expire between 2026 and 2030 if not utilized.

For the year ended December 31, 2025, the Group paid withholding tax of RMB 7,299,300 (USD 1,043,786) for the remittance of earnings from subsidiaries in the PRC to offshore entities. As of December 31, 2025, the Group has accrued RMB 25,508,844 (USD 3,647,716) deferred tax liabilities related to undistributed earnings from PRC subsidiaries.

  

Below is a tabular roll-forward of the Group’s unrecognized tax benefits.

 

Unrecognized tax benefits —December 31, 2023   278,696,225 
Increases — tax positions in the current period   69,991,983 
Decreases — tax positions in prior period   (32,266,665)
Unrecognized tax benefits — December 31, 2024   316,421,543 
Unrecognized tax benefits — January 1, 2025   316,421,543 
Increases — tax positions in the current period   45,959,878 
Decreases — tax positions in prior period   (42,330,529)
Unrecognized tax benefits — December 31, 2025   320,050,892 

 

As of December 31, 2024 and 2025, the Company has uncertain tax position amounts of RMB 316,421,543 and RMB 320,050,892 (USD 45,766,669), respectively, of which RMB 310,887,764 and RMB 315,742,375 (USD 45,150,599) are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets.

 

As of December 31, 2024 and 2025, RMB 310,887,764 and RMB 316,134,032(USD 45,206,565) of the uncertain tax positions, if ultimately recognized, would affect the effective tax rate.

 

In the year ended December 31, 2025, the Company recorded interest expense of RMB 13,003,918 (USD 1,859,536). In the year ended December 31, 2024, the Company recorded interest expense of RMB 17,947,223.

 

As of December 31, 2025, the accumulated interest expense and penalty recorded by the Group was RMB 142,188,369 (USD 20,332,666) and nil, respectively.

 

The Group’s subsidiaries in Chinese mainland are subject to examination by the tax authorities for tax years 2020 through 2025 on non-transfer pricing matters and from 2015 through 2025 on transfer pricing matters.