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INCOME TAXES
6 Months Ended
Sep. 30, 2012
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 10 - INCOME TAXES

 

Shandong Spring Pharmaceutical Co., Ltd is subject to the Enterprise income tax (“EIT”) at a statutory rate of 25%.

 

The expense associated with the recognition of a contingent obligation under ASC 480-10-25-8, is not tax deductible in China. Per ASC 740-10-25-3A, “An excess of the amount for financial reporting over the tax basis of an investment in a foreign subsidiary or a foreign corporate joint venture that is essentially permanent in duration. ” Therefore, the tax difference in the amount of $1,382,973 ($5,531,892 x 25% tax rate) caused by expense recognized on our book but not in the Chinese tax purpose at March 31, 2012 will be a permanent difference. At September 30, 2012, such tax difference is off-set by $1,106,378 ($4,425,514 x 25%) for the income recognized due to adjustment to the contingent obligation on our book but not for Chinese tax purpose. The net tax difference is amounted to $276,595 ($1,106,378 x 25%) at September 30, 2012.

 

In addition, the loss from impairment of the US patent is not tax deductible in China. Therefore, the tax difference in the amount of $7,920,122 ($31,680,487 x 25%) caused by loss recognized on our book but not for the Chinese tax purpose at March 31, 2012 will be a permanent difference.

 

For the three months ended September 30, 2012 and 2011, Shandong Spring Pharmaceutical Co., Ltd. recorded income tax provisions of $583,197 and $759,009, respectively.

 

For the six months ended September 30, 2012 and 2011, Shandong Spring Pharmaceutical Co., Ltd. recorded income tax provisions of $1,326,424 and $1,171,060, respectively.