Income Tax

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax

NOTE 6   INCOME TAX

PRC pre-tax income for the three and six months ended June 30, 2012 and 2011, was taxable in the following jurisdictions.

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
PRC	$	1,582,335	$	712,029	$	3,350,278	$	3,691,090
Others		1,089,824		1,760,816		1,967,947		2,072,772
	$	2,672,159	$	2,472,845	$	5,318,225	$	5,763,862

The Company’s operating subsidiaries are governed by the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“the Income Tax Laws”). 

All PRC subsidiaries are subject to income tax at 25% statutory rate.

Perfect Dream was incorporated in the British Virgin Islands (BVI), and under the current laws of the BVI dividends and capital gains arising from the Company’s investments in the BVI are not subject to income taxes.

Ever-Glory HK was incorporated in Samoa on September 15, 2009, and under the current laws of Samoa has no liabilities for income tax.

The following table reconciles the PRC statutory rates to the Company’s effective tax rate for the three and six months ended June 30, 2012 and 2011, respectively:

	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
PRC statutory rate		25.0	%		25.0	%		25.0	%		25.0	%
Non-taxable or non-deductible items		(2.3	)		(1.8	)		(1.9	)		(1.9	)
Effect of foreign income tax rates		(8.5	)		(16.5	)		(7.9	)		(7.6	)
Income tax exemption		-			(0.1	)		0.1			(0.1	)
Other		(2.2	)		2.1			0.6			0.1
Effective income tax rate		12.0	%		8.7	%		15.9	%		15.5	%

Income tax expense for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three months ended					Six months ended
	June 30,					June 30,
	2012		2011			2012		2011
Current	$	121,988	$	474,871		$	265,092	$	978,705
Deferred		199,022		(260,895	)		580,774		(85,708	)
Income tax expense	$	321,010	$	213,976		$	845,866	$	892,997