TAXES PAYABLE

12 Months Ended

Jun. 30, 2015

Disclosure of Taxes Payable [Text Block]

NOTE 9– TAXES PAYABLE

Enterprise Income Tax

Effective January 1, 2008, the Enterprise Income Tax (“EIT”) law of the PRC replaced the tax laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”). The EIT rate of 25% replaced the 33% rate that was applicable to both DEs and FIEs. The two year tax exemption and three year 50% tax reduction tax holiday for production-oriented FIEs was eliminated. Since January 1, 2008, Jinong became subject to income tax in China at a rate of 15% as a high-tech company, as a result of the expiration of its tax exemption on December 31, 2007. Accordingly, it made provision for income taxes for the years ended June 30, 2015, 2014 and 2013 of $4,262,040, $4,249,206 and $6,654,038, respectively, which is mainly due to the operating income from Jinong. Gufeng is subject to 25% EIT rate and thus it made provision for income taxes of $4,654,774, $3,811,740 and $3,529,950 for the year ended June 30, 2015, 2014 and 2013, respectively.

Value-Added Tax

All of the Company’s fertilizer products that are produced and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008, the PRC State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”, which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for exemption in May 2009, which was granted effective September 1, 2009, continuing through December 31, 2015. On August 10, 2015 and August 28, 2015, the SAT released Notice #90. “Reinstatement of VAT for Fertilizer Products”, and Notice #97, “Supplementary Reinstatement of VAT for Fertilizer Products”, which restore the VAT of 13% of the gross sales price on certain fertilizer products starting from September 1, 2015, but granted tax payers a reduced rate of 3% September 1, 2015 through June 30, 2016.

Income Taxes and Related Payables

Taxes payable consisted of the following:

	June 30,		June 30,
	2015		2014
VAT provision	$	27,251	$	61,506
Income tax payable		3,778,339		1,166,683
Other levies		698,952		693,266
Total	$	4,504,542	$	1,921,455

The provision for income taxes consisted of the following:

	Years Ended June 30,
	2015		2014		2013
Current tax - foreign	$	8,916,815	$	8,060,946	$	10,183,988
Deferred tax		-		-		-
	$	8,916,815	$	8,060,946	$	10,183,988

The components of deferred income tax assets and liabilities as of June 30, 2015 and 2014 are as follows:

	June 30,		June 30,
	2015		2014
Deferred tax assets:
Net operating loss	$	11,847,474	$	9,616,214
Total deferred tax assets		11,847,474		9,616,214
Less valuation allowance		(11,847,474)		(9,616,214)
	$	-	$	-

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

At June 30, 2015, based on the weight of available evidence, including cumulative losses in recent years and expectations of future taxable income, the Company determined that it was more likely than not that its deferred tax assets would not be realized and have a $9.6 million valuation allowance associated with its deferred tax assets.

Tax Rate Reconciliation

The Company’s effective tax rates were approximately 22.1%, 24.0% and 18.5% for years ended June 30, 2015, 2014 and 2013, respectively. Substantially all of the Company’s income before income taxes and related tax expense are from PRC sources. Actual income tax benefit reported in the consolidated statements of income and comprehensive income differ from the amounts computed by applying the US statutory income tax rate of 34% to income before income taxes for the years ended June 30, 2015, 2014 and 2013 for the following reasons:

June 30, 2015
	China				United States
	15% - 25%				34%				Total

Pretax income (loss)	$	46,922,721			$	(6,560,780)			$	40,361,941

Expected income tax expense (benefit)		11,730,680	25.0	%		(2,230,665)	34.0	%		9,500,015
High-tech income benefits on Jinong		(2,675,905)	(5.7)	%		-	-			(2,675,905)
Losses from subsidiaries in which no benefit is recognized		(137,960)	(0.3)	%		-	-			(137,960)
Change in valuation allowance on deferred tax asset from US tax benefit						2,230,665	(34.0)	%		2,230,665
Actual tax expense	$	8,916,815	19.0	%	$	-	-	%	$	8,916,815	22.1	%

June 30, 2014
	China				United States
	15% - 25%				34%				Total

Pretax income (loss)	$	42,708,208			$	(9,132,567)			$	33,575,641

Expected income tax expense (benefit)		10,677,052	25.0	%		(3,105,073)	34.0	%		7,571,979
High-tech income benefits on Jinong		(1,568,160)	(3.7)	%		-	-			(1,568,160)
Losses from subsidiaries in which no benefit is recognized		(1,047,946)	(2.5)	%		-	-			(1,047,946)
Change in valuation allowance on deferred tax asset from US tax benefit		-				3,105,073	(34.0)	%		3,105,073
Actual tax expense	$	8,060,946	18.9	%	$	-	-	%	$	8,060,946	24.0	%

June 30, 2013
	China				United States
	15% - 25%				34%				Total

Pretax income (loss)	$	58,899,089			$	(3,941,053)			$	54,958,036

Expected income tax expense (benefit)		14,724,772	25.0	%		(1,339,958)	34.0	%		13,384,814
High-tech income benefits on Jinong		(4,430,219)	(7.5)	%		-	-			(4,430,219)
Losses from subsidiaries in which no benefit is recognized		(110,565)	(0.2)	%		-	-			(110,565)
Change in valuation allowance on deferred tax asset from US tax benefit		-				1,339,958	(34.0)	%		1,339,958
Actual tax expense	$	10,183,988	17.3	%	$	-	-	%	$	10,183,988	18.5	%