Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

v3.7.0.1
INCOME TAXES
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
10. INCOME TAXES
 
United States of America
 
As of June 30, 2017 and December 31, 2016, the Company in the United States had $3,603,591 and $2,212,890 in net operating loss carried forward available to offset future taxable income, respectively. Federal net operating losses can generally be carried forward twenty years. The federal corporate net operating loss carryover is expired in 20 taxable years following the taxable year of the loss.
  
The Company believes that it is more likely than not that these net accumulated operating losses will not be utilized in the future. Therefore, the Company has provided a full valuation allowance for the deferred tax assets arising from the losses at the U.S. during the six months ended June 30, 2017 and year ended December 31, 2016 amounting to $1,267,451 and $962,012, respectively. Accordingly, the Company has no net deferred tax assets under the US entity.
 
Hong Kong
 
The provision for current income taxes of the subsidiary operating in Hong Kong has been calculated by applying the current rate of taxation of 16.5% for the six months ended June 30, 2017 and 2016, if applicable.
 
PRC
 
In accordance with the relevant tax laws and regulations of the PRC, a company registered in the PRC is subject to income taxes within the PRC at the applicable tax rate on taxable income. All the PRC subsidiaries were subject to income tax at a rate of 25%.
 
The income tax provision consists of the following components: 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2017
 
2016
 
2017
 
2016
 
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
Current
 
$
63,765
 
$
473,294
 
$
413,763
 
$
876,927
 
Deferred
 
 
8,515
 
 
(94,116)
 
 
(33,602)
 
 
(96,581)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Provision for Income Taxes
 
$
72,280
 
$
379,178
 
$
380,161
 
$
780,346
 
 
A reconciliation between the Company’s actual provision for income taxes and the provision at the statutory rate is as follow:
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2017
 
2016
 
2017
 
2016
 
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
Income before income tax expense
 
$
318,399
 
$
1,496,021
 
$
1,499,819
 
$
2,993,241
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computed tax expense with statutory tax rate
 
 
52,537
 
 
246,843
 
 
247,472
 
 
493,885
 
Impact of different tax rates in other jurisdictions
 
 
(8,506)
 
 
(89,725)
 
 
(161,600)
 
 
(231,889)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-deductible items:
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect of non-deductible expenses
 
 
164,382
 
 
(26,317)
 
 
184,900
 
 
21,625
 
Previous years unrecognized taxation effect
 
 
(196,050)
 
 
-
 
 
(196,050)
 
 
-
 
Changes in valuation allowance
 
 
59,917
 
 
248,377
 
 
305,439
 
 
496,725
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Provision for Income Taxes
 
$
72,280
 
$
379,178
 
$
380,161
 
$
780,346