Income Taxes

9 Months Ended

Jun. 30, 2025

NOTE 11. INCOME TAXES

United States

MGSD is a Nevada corporation that is subject to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions went into effect starting January 1, 2018.

Samoa

MGSD Samoa was incorporated in Samoa and, under the current laws of Samoa, is not subject to income tax.

Hong Kong

MGSD HK was incorporated in Hong Kong and is subject to Hong Kong profits tax. MGSD HK is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%. The Company did not have any income (loss) subject to the Hong Kong profits tax.

China

Tongzhilian is subject to a 25% standard enterprise income tax in the PRC. Due to the fact that Tongzhilian’s revenue exceeded the upper limit for small-scale taxpayers in the second quarter, Tongzhilian has been converted to a general taxpayer. All income for the last tax year (from January 1, 2024, to December 31, 2024) is subject to a corporate income tax rate of 25%. Therefore, the company had accrued additional corporate income tax for the period from January to September of 2024 at a rate of 25%, amounting to $29,524.

A reconciliation of income before income taxes for domestic and foreign locations for the nine months ended June 30, 2025 and 2024 is as follows:

	For the Nine Months Ended June 30,
	2025			2024
United States	$	(142,836	)	$	(87,242	)
Foreign		249,745			109,548
Before income taxes	$	106,909		$	22,306

The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows:

	For the Nine Months Ended June 30,
	2025			2024
Income tax (benefit) at USA statutory rate		21	%		21	%
U.S. valuation allowance		(21	)%		(21	)%
Effective combined tax rate		0	%		0	%

The difference between the PRC statutory income tax rate and the PRC effective tax rate was as follows:

	For the Nine Months Ended June 30,
	2025			2024
Income tax (benefit) at PRC statutory rate		25	%		25	%
PRC valuation allowance		2.69	%		(1	)%
Tax preference		11.69	%		(19	)%
Effective combined tax rate		39.38	%		5	%

The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the firm has significant business operations. The tax years under examination vary by jurisdiction. The table below presents the earliest tax year that remain subject to examination by major jurisdiction.

		The year as of
U.S. Federal		September 30, 2024
China		December 31, 2024

- Definition

The entire disclosure for income tax.

+ References

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+ Details

Maitong Sunshine Cultural Development Co., Ltd 10-Q