Taxes Payable

12 Months Ended

Jun. 30, 2016

Taxes Payable [Abstract]

TAXES PAYABLE

NOTE 10 – 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, 2016 and 2015 of $3,577,978 and $4,262,040, 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 $3,584,006 and $4,654,775 for the year ended June 30, 2016 and 2015, 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. 

Income Taxes and Related Payables

Taxes payable consisted of the following:

	June 30,		June 30,
	2016		2015
VAT provision	$	2,218	$	27,251
Income tax payable		3,445,480		3,778,339
Other levies		656,520		698,952
Total	$	4,104,218	$	4,504,542

The provision for income taxes consists of the following:

	Years Ended June 30,
	2016		2015
Current tax - foreign	$	7,371,967	$	8,916,815
Deferred tax		-		-
	$	7,371,967	$	8,916,815

The components of deferred income tax assets and liabilities are as follows:

	June 30,			June 30,
	2016			2015
Deferred tax assets:
Net operating loss	$	13,803,943		$	11,847,474
Total deferred tax assets		13,803,943			11,847,474
Less valuation allowance		(13,803,943	)		(11,847,474	)
	$	-		$	-

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, 2016, 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 $13.8 million valuation allowance associated with its deferred tax assets.

Tax Rate Reconciliation

Our effective tax rates were approximately 21.6% and 22.1% for years ended June 30, 2016 and 2015, 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, 2016 and 2015 for the following reasons:

June 30, 2016
	China					United States
	15% - 25%					34%					Total
Pretax income (loss)	$	32,076,160				$	(5,768,770	)			$	26,307,390
Expected income tax expense (benefit)		8,019,040		25.0	%		(1,961,382	)	34.0	%		6,062,571
High-tech income benefits on Jinong		(2,214,672	)	(5.7	)%		-		-			(2,214,672	)
Losses from subsidiaries in which no benefit is recognized		1,567,599	)	(0.8	)%		-		-			1,567,599	)
Change in valuation allowance on deferred tax asset from US tax benefit		-					1,961,382		(34.0	)%		1,961,382
Actual tax expense	$	7,371,967		23	%	$	-		-	%	$	7,371,967		21.6	%

June 30, 2015
	China					United States
	15% - 25%					34%					Total
Pretax income (loss)	$	46,922,721				$	(6,562,530	)			$	40,360,191
Expected income tax expense (benefit)		11,730,680		25.0	%		(2,231,260	)	34.0	%		9,499,420
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		-					2,231,260		(34.0	)%		2,231,260
Actual tax expense	$	8,916,815		19.0	%	$	-		-	%	$	8,916,815		22.1	%