Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes [Text Block]

Note 11 - Income Taxes

Local PRC Income Tax

Pursuant to the tax laws of the PRC, general enterprises are subject to income tax at 25%.

The Company operates in a privileged economic zone which entitles it to certain tax benefits (tax holiday). Hainan Shiner has a tax rate of 15% from January 1, 2009 to December 31, 2014 since it is recognized as a high-tech enterprise. Hainan Shiner acquired all of the assets of Shiny-Day and Modern in 2009, partially in response to the expiration of the tax holiday.

Income tax expense reflected in the consolidated statements of operations and other comprehensive loss consist of the following for 2015 and 2014:

		2015		2014
Current expense:
Federal	$	-	$	-
State		-		-
Foreign		962,688		1,022,512
		962,688		1,022,512
Deferred expense:
Federal		-		-
State		-		-
Foreign		-		-
		-		-
Total income tax expense	$	962,688	$	1,022,512

The components of deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows:

		2015			2014
Deferred tax assets:
Net operating loss	$	674,000		$	630,000
Total deferred tax assets		674,000			630,000
Less valuation allowance		(674,000	)		(630,000	)
	$	-		$	-

A reconciliation of tax at US federal statutory rate to provision for income tax recorded in the financial statements for 2015 and 2014 is as follows:

	2015	2014
Tax provision (benefit) at statutory rate	34%	34%
Foreign tax rate difference	( 9)%	( 9)%
US and Chinese current NOL for which no benefit is realized	323%	( 12)%
Effect of tax holiday	0%	7%
Effective rate	348%	20%

If the Company had not been exempt from income taxes due to operating in a privileged economic zone, for 2014 net income would have been decreased by $363,000. The net effect on EPS had income tax been applied at the regular rates would have been $0.01.

Foreign pretax income (loss) approximated $(557,509) and $4,157,000 for 2015 and 2014, respectively. Pretax earnings of a foreign subsidiary are subject to US taxation when effectively repatriated. The Company provides income taxes on the undistributed earnings of non-US subsidiaries except to the extent such earnings are indefinitely invested outside the US. At December 31, 2015, $15,871,000 of accumulated undistributed earnings of non-US subsidiaries was indefinitely invested. At the existing US federal income tax rate, additional taxes of $2,608,000 would have to be provided if such earnings were remitted currently.