INCOME TAXES

12 Months Ended

Dec. 31, 2021

NOTE 16 - INCOME TAXES

The Company operates in the United States and its wholly owned subsidiaries operate in Japan, Hong Kong and Switzerland and files tax returns in these jurisdictions.

Loss from continuing operations before income tax expense (benefit) is as follows:

	For the Years Ended
	December 31,
	2021			2020
Tax jurisdiction from:
- US	$	(5,101,587	)	$	(21,957,557	)
- Foreign
Hong Kong (HK)		(79,656	)		(257,753	)
Japan (JP)		56,948			(20,988	)
Switzerland (EU)		-			404,331
Loss before income taxes	$	(5,124,294	)	$	(21,789,991	)

There was no provision for income taxes for the years ended December 31, 2021 and 2020, as the Company has tax losses in all jurisdictions. The expected approximate income tax rate for 2021 and 2020 for United States is 21%, Hong Kong is 16.5%, Japan is 30%, and Switzerland is 20%, whereas the actual rate was zero. The total income tax benefit differs from the expected income tax benefit principally due to the valuation allowance recorded against the deferred tax assets which are principally comprised of net operating losses (“NOLs”) and permanent differences due to a significant amount of non-cash income and expenses.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2021 and 2020:

SCHEDULE OF DEFERRED TAX ASSETS


	December 31,
	2021			2020
Deferred tax assets:
NOL carry forwards
United States – current rate	$	5,513,210		$	3,532,239
NOL carryforwards - United States	$	5,513,210		$	3,532,239
United States – effect of change in statutory rate		-			-
-Foreign		(50,327	)		682,324
NOL carryforwards - Foreign		(50,327	)		682,324
Total		5,462,884			4,246,044
Less: valuation allowance		(5,462,884	)		(4,264,044	)
Net deferred tax asset	$	-		$	-

The Company applies the authoritative accounting guidance under ASC 740 for the recognition, measurement, classification, and disclosure of uncertain tax positions taken or expected to be taken in a tax return. The Company provided a full valuation allowance against its deferred tax assets as of December 31, 2021 and 2020. This valuation allowance reflects the estimate that it is more likely than not that the net deferred tax assets may not be realized.

The Company has approximately $5,100,000 of U.S. and foreign carry forwards, the tax effect of which is approximately $5,500,000 as of December 31, 2021. Certain of these carry forwards begin to expire in 2024.

The U. S. NOL carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company has not performed a study to determine if the NOL carry forwards are subject to these Section 382 limitations. In addition, the Company has foreign NOLs. The Company is still evaluating the impact of a change in stock ownership and the potential limitation of foreign NOLs.

A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized. The Company has recorded a full valuation allowance of $5,462,884 and $4,264,044 for deferred tax assets existing as of December 31, 2021 and 2020, respectively. The change in the valuation allowance was an increase of $1,188,840 and $617,310 for the years ended December 31, 2021 and 2020, respectively. The valuation allowance as of December 31, 2021 and 2020 is attributable to NOL carry forwards in the United States and foreign jurisdictions.

The Company’s tax returns are subject to examination by tax authorities in the U.S., and various state and foreign jurisdictions. The Company is generally no longer subject to examinations for years prior to 2014. The Company is currently delinquent in its income tax filings.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

12 Retech Corp 10-K