Provision For Income Taxes

3 Months Ended

Aug. 31, 2011

Provision For Income Taxes

Provision For Income Taxes

NOTE 14 – PROVISION FOR INCOME TAXES

Income tax expense for the three months ended August 31, 2011 and 2010 are summarized as follows:

	Three months ended August 31,
	2011			2010
Current – PRC income tax provision	$	52,126		$	116,152
Deferred income tax		(3,281	)		-
Total	$	48,845		$	116,152

A reconciliation of the expected tax with the actual tax expense is as follows:

	Three months ended August 31,
	2011			2010
	Amount			Amount
Income before provision for income taxes	$	16,235		$	352,685
Expected PRC income tax expense at statutory tax rate of 25%		4,059			88,171
Different tax rate for PRC/Hong Kong local authority		(11,995	)		(2,094	)
Expenses not deductible for tax		12,931			25,911
Utilization of tax loss brought forward		(15,388	)		(6,140	)
Tax losses not provided for deferred tax		59,238			10,304
Actual tax expense	$	48,845		$	116,152

(i)           All PRC subsidiaries are subject to PRC tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.

(ii)           VMS and Redtone China did not generate any assessable profits in Hong Kong and therefore are not subject to Hong Kong tax.