NCTY » Topics » Reconciliation of the differences between the statutory tax rate and the effective tax rate

This excerpt taken from the NCTY 20-F filed Jun 28, 2007.

Reconciliation of the differences between the statutory tax rate and the effective tax rate

A reconciliation between the statutory EIT rate and the 9Webzen Group’s effective tax rate is as follows:

 

     For the
period ended
December 31,
2004
    For the year
ended
December 31,
2005
    For the year
ended
December 31,
2006
 
     (audited)     (unaudited)     (unaudited,
Note 3)
 

Statutory EIT rate

   33 %   33 %   33 %

Tax rate differential from statutory rate

   (5 )%   (37 )%   (20 )%

Effect of tax holiday applicable to 9Webzen Shanghai

   (29 )%   2 %   (7 )%

Tax expense (benefit) arising from temporary differences of 9Webzen Shanghai which will be subject to a higher EIT rate after the tax holiday

   (1 )%   2 %   (6 )%

Effect of permanent difference on non-deductible expenses

   —       (2 )%   (2 )%

Change in deferred tax assets

   —       (5 )%   10 %

Change in deferred tax valuation allowance

   —       (21 )%   (10 )%
                  

Effective EIT rate

   (2 )%   (28 )%   (2 )%
                  

 

F-57


Table of Contents
This excerpt taken from the NCTY 20-F filed Oct 12, 2006.

Reconciliation of the differences between statutory tax rate and the effective tax rate

A reconciliation between the statutory EIT rate and the 9Webzen Group’s effective tax rate is as follows:

 

     For the period
ended
December
31, 2003
    For the year
ended
December
31, 2004
    For the year
ended
December
31, 2005
 
     (audited)     (audited)     (unaudited,
Note 3)
 

Statutory EIT rate

   33 %   33 %   33 %

Tax rate differential from statutory rate

   (11 %)   (5 %)   (37 %)

Effect of tax holiday applicable to 9Webzen Shanghai

   (22 %)   (29 %)   2 %

Tax expense (benefit) arising from temporary differences of 9Webzen Shanghai which will be subject to a higher EIT rate after the tax holiday

   (1 %)   (1 %)   2 %

Effect of permanent difference on non-deductible expenses

   —       —       (2 %)

Change in deferred tax assets

   —       —       (5 %)

Change in deferred tax valuation allowance

   —       —       (21 %)
                  

Effective EIT rate

   (1 %)   (2 %)   (28 %)
                  
This excerpt taken from the NCTY 20-F filed Jun 30, 2006.

Reconciliation of the differences between statutory tax rate and the effective tax rate

A reconciliation between the statutory EIT rate and the 9Webzen Group’s effective tax rate is as follows:

 

     For the period
ended
December
31, 2003
    For the year
ended
December
31, 2004
    For the year
ended
December
31, 2005
 
     (audited)     (audited)     (unaudited,
Note 3)
 

Statutory EIT rate

   33 %   33 %   33 %

Tax rate differential from statutory rate

   (11 %)   (5 %)   (37 %)

Effect of tax holiday applicable to 9Webzen Shanghai

   (22 %)   (29 %)   2 %

Tax expense (benefit) arising from temporary differences of 9Webzen Shanghai which will be subject to a higher EIT rate after the tax holiday

   (1 %)   (1 %)   2 %

Effect of permanent difference on non-deductible expenses

   —       —       (2 %)

Change in deferred tax assets

   —       —       (5 %)

Change in deferred tax valuation allowance

   —       —       (21 %)
                  

Effective EIT rate

   (1 %)   (2 %)   (28 %)
                  
This excerpt taken from the NCTY 20-F filed Jun 30, 2005.

Reconciliation of the differences between statutory tax rate and the effective tax rate

 

A reconciliation between the statutory EIT rate and the 9Webzen Group’s effective tax rate is as follows:

 

     For the period
ended
December 31,
2002


   For the year
ended
December 31,
2003


    For the year
ended
December 31,
2004


 

Statutory EIT rate

   —      33 %   33 %

Tax rate differential from statutory rate

   —      (11 )%   (5 )%

Effect of tax holiday applicable to 9Webzen Shanghai

   —      (22 )%   (29 )%

Tax benefit arising from temporary differences of 9Webzen Shanghai which will be subject to a higher EIT rate after the tax holiday

   —      (1 )%   (1 )%
    
  

 

Effective EIT rate

   —      (1 )%   (2 )%
    
  

 

 

F-55


Table of Contents

9WEBZEN LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD FROM OCTOBER 2, 2002 (DATE OF INCORPORATION) TO DECEMBER 31, 2002 AND THE YEARS ENDED DECEMBER 31, 2003 AND 2004

 

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