Taxes Payable

3 Months Ended

Sep. 30, 2017

Taxes Payable [Abstract]

TAXES PAYABLE

NOTE 11 – 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, because of the expiration of its tax exemption on December 31, 2007. Accordingly, it made provision for income taxes for the three-month period ended June 30, 2017 and 2016 of $1,013,134 and $987,512, 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 $511,796 and $307,735 for the three months ended September 30, 2017 and 2016, respectively.

Value-Added Tax

Certain 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. 

Income Taxes and Related Payables

	Sept 30,			June 30,
	2017			2017
VAT provision	$	(538,043	)	$	(575,872	)
Income tax payable		582,425			2,229,735
Other levies		668,962			1,036,544
Total	$	713,344		$	2,690,407

The provision for income taxes consists of the following

	September 30,		September 30,
	2017		2016
Current tax - foreign	$	1,722,655	$	1,295,248
Deferred tax		-		-
	$	1,722,655	$	1,295,248

Our effective tax rates were approximately 25% and 15% for the three months ended September 30, 2017 and 2016, 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 three months ended September 30, 2017 and 2016 for the following reasons:

September 30, 2017

Tax Rate Reconciliation

	China					United States
30-Sep-17	15% - 25%					34%					Total
Pretax income (loss)	$	7,015,501				$	(198,017	)			$	6,817,484
Expected income tax expense (benefit)		1,753,875		0.250			(67,326	)	34	%		1,686,549
High-tech income benefits on Jinong		(675,422	)	-0.096								(675,422	)
Losses from subsidiaries in which no benefit is recognized		644,202		0.092								644,202
Change in valuation allowance on deferred tax asset from US tax benefit		0					67,326		-34	%		67,326
Actual tax expense	$	1,722,655		24.6	%	$	0		0.00	%	$	1,722,655		25.3	%

September 30, 2016

	China					United States
	15% - 25%					34%					Total
Pretax income (loss)	$	8,965,900					(346,122	)			$	8,619,778
Expected income tax expense (benefit)		2,241,475		25.0	%		(117,682	)	34.0	%		2,123,794
High-tech income benefits on Jinong		(593,485	)	(6.6	)%		-		-			(593,485	)
Losses from subsidiaries in which no benefit is recognized		(352,742	)	(3.9	)%		-		-			(352,742	)
Change in valuation allowance on deferred tax asset from US tax benefit		-					117,682		(34.0	)%		117,681
Actual tax expense	$	1,295,248		14.4	%	$	-		-	%	$	1,295,248		15.0	%