Provision For Income Taxes

3 Months Ended

Aug. 31, 2012

Provision For Income Taxes:

Provision For Income Taxes

NOTE 13 – PROVISION FOR INCOME TAXES

Income tax expense for the three months ended August 31, 2012 and August 31, 2011 are summarized as follows:

	Three months ended August 31, 2012		Three months ended August 31, 2011
Current – PRC income tax provision		17,846		52,126
Deferred income tax (income)/ provision	$	(3,598)	$	(3,281)
Total	$	14,248	$	48,845

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

	Three months ended August 31, 2012		Three months ended August 31, 2011
Income before provision for income taxes		(73,432)		16,235
Expected PRC income tax expense at statutory tax rate of 25%	$	(18,358)	$	4,059
Different tax rate for PRC/Hong Kong local authority		1,708		(11,995)
Expenses not deductible for tax		1,653		12,931
Utilization of tax loss brought forward		~		(15,388)
Tax loss not provided for deferred tax		29,245		59,238
Total	$	14,248	$	48,845

(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.