5.	TAXATION

The Company and its subsidiaries file separate income tax returns.

Cayman Islands

Under the current laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, upon any payment of dividends by the Company, no Cayman Islands withholding tax is imposed.

People's Republic of China

On March 16, 2007, the National People's Congress approved the Corporate Income Tax Law of the People's Republic of China (the "CIT Law") with effective on January 1, 2008. The CIT Law enacted a statutory income tax rate of 25%. As foreign invested enterprises, Jiangxi Jinko and Zhejiang Jinko are entitled to a two year tax exemption from CIT and a 50% CIT reduction for the succeeding three years thereafter. Jiangxi Jinko and Zhejiang Jinko are each subject to CIT rate of 12.5% starting from year 2010 to year 2012.

Additionally, under the CIT Law, 10% withholding income tax ("WHT") will be levied on foreign investors for dividend distributions from foreign invested enterprises' profit earned after January 1, 2008. For certain treaty jurisdictions such as Hong Kong which has signed double tax arrangement with the PRC, the applicable WHT rate could be reduced to 5% if foreign investors directly hold at least 25% shares of invested enterprises at any time throughout the 12-month period preceding the entitlement to the dividends and they are also qualified as beneficial owners to enjoy the treaty benefit. The Company was not considered to fulfill above criteria as of December 31, 2012and therefore the applicable WHT rate was 10%. Deferred income taxes are not provided on undistributed earnings of the Company's subsidiaries that are intended to be permanently reinvested in China. Cumulative undistributed earnings of the Company's PRC subsidiaries intended to be permanently reinvested totaled RMB450,780,918 and the amount of the unrecognized deferred tax liability on the permanently reinvested earnings was RMB45,078,092 as of December 31, 2012.

Hong Kong

The Company's subsidiaries established in Hong Kong, Paker and JinkoSolar International, are subject to Hong Kong profit tax at a rate of 16.5% on its assessable profit.

European Countries

Jinko Switzerland is incorporated in Switzerland and according to its current business model where it employs limited staff and generates income exclusively from trading activities conducted outside Switzerland, is subject to a combined federal, cantonal and communal tax rate of 8.62% in 2012.

Jinko GMBH is incorporated in Germany and is subject to Germany profit tax rate of approximately 33% on the assessable profit.

Jinko Italy is incorporated in Italy and is subject to corporate income tax at 31.4%.

Jinko France is incorporated in France and is subject to corporate income tax at 33.33%.

United States

Both Jinko US and Jinko US Holding are incorporated in Delaware, the United States. Jinko US and Jinko US Holding do not conduct any business in Delaware, thus, they are not subject to Delaware State income tax. Jinko US conducts business in California. It is subject to a progressive federal corporate income tax from 15% to 35% and California state income tax of 8.84%, which is deductible for federal income tax purpose.

Canada

Jinko Canada is incorporated in Canada and is subject to a federal corporate income tax of 15% and provinces and territories income tax of 11%.

Australia

Jinko Australia is incorporated in Australia and is subject to corporate income tax at 30%.

Composition of Income Tax Expense

Income/(loss) before income taxes for the years ended December 31, 2010, 2011 and 2012 were taxed within the following jurisdictions:

	For the year ended December 31,
	2010			2011			2012
	RMB			RMB			RMB
Cayman Islands		(2,187,039	)		246,885,595			(136,614,196	)
PRC		1,032,571,112			127,032,230			(1,191,217,775	)
Other countries		(2,380,452	)		(19,519,201	)		(224,901,695	)
Income/(Loss) before income taxes		1,028,003,621			354,398,624			(1,552,733,666	)

For the year ended December 31, 2011 and 2012, the earnings (losses) attributed to Cayman Islands was mainly due to the fair value gain (loss) from convertible senior notes and capped call options.

The current and deferred positions of income tax expense included in the consolidated statement of operations for the years ended December 31, 2010, 2011 and 2012 are as follows:

	For the year ended December 31,
	2010			2011			2012
	RMB			RMB			RMB
Current income tax (expense)/benefit
PRC		(138,020,196	)		(76,792,019	)		7,561,393
Other countries		-			(71,536	)		838,169
Total current income tax expense/benefit		(138,020,196	)		(76,863,555	)		8,399,562
Deferred PRC tax (expense)/benefit		(8,110,198	)		(4,209,187	)		518,086
Income tax benefit/(expense)		(146,130,394	)		(81,072,742	)		8,917,648

Reconciliation of the differences between statutory tax rate and the effective tax rate

Reconciliation between the statutory CIT rate and the Company's effective tax rate is as follows:

	Year Ended December 31,
	2010			2011			2012
	%			%			%
Statutory CIT rate		25			25			(25	)
Effect of permanent differences:
-Share-based compensation expenses		0.6			0.7			0.3
-Change in fair value of convertible senior notes and capped call options		-			(21.1	)		1.6
-Goodwill impairment		-			3.2			-
-Accrued payroll and welfare expenses		0.9			4.4			0.8
-Change of enact tax rate		-			-			(7.5	)
-Effect of prior year tax difference (1)		-			-			(0.6	)
-Other non-deductible expenses		-			5.6			0.8
Difference in tax rate of a subsidiary outside the PRC		0.0			(0.9	)		0.9
Effect of tax holiday for subsidiaries		(12.9	)		(13.2	)		6.9
Change in valuation allowance		0.6			19.1			21.2
Effective CIT rate		14.2			22.8			(0.6	)

(1) The Company recorded an out-of-period adjustment of RMB12,146,071 resulting from income tax filing difference for two PRC entities, which should have been recorded in the year ended December 31, 2011. The originating amount in 2011 was not material to the 2011 consolidated financial statements, nor was the out of period adjustment recorded in 2012 material to the 2012 consolidated financial statements.

The aggregate amount and per share effect of reduction of CIT for certain PRC subsidiaries as a result of tax holidays are as follows:

	For the year ended December 31,
	2010		2011		2012
	RMB		RMB		RMB
The aggregate amount of effect		132,120,599		46,723,125		-
Per share effect-basic		1.76		0.50		-
Per share effect-diluted		1.64		0.46		-

Significant components of deferred tax assets-current

	As of December 31,
	2011			2012
	RMB			RMB
Net operating losses		-			-
Provision for inventories, accounts receivable, other receivable		57,690,574			170,795,477
Change in fair value of forward contracts		(14,042,284	)		(1,749,190	)
Accrued warranty costs		1,688,813			4,952,344
Accrued interest		-			6,529,370
Other temporary differences		599,211			(5,153,313	)
Total deferred tax assets		45,936,314			175,374,688
Less: Valuation allowance		(45,936,314	)		(175,374,688	)
Net deferred tax assets-current		-			-

Significant components of deferred tax assets-non-current

	As of December 31,
	2011			2012
	RMB			RMB

Net operating losses		13,970,679			91,384,912
Accrued warranty costs		12,485,470			25,690,397
Increase in fair value of property, plant and equipment and land use rights arising from business combination		(2,920,881	)		(3,532,006	)
Impairment of property, plant and equipment		598,075			10,744,006
Provision for advance to suppliers to be utilized beyond one year		-			56,931,594
Provision of prepayment for purchase of property, plant and equipment		-			11,048,442
Pre-operating expenses of a subsidiary that are deductible in future periods		50,487			-
Assets related government grant		3,131,413			6,726,539
Timing difference for revenue recognition of retainage contract		-			(28,557,111	)
Other temporary differences		715,514			(65,135	)
Total deferred tax assets		28,030,757			227,485,860
Less: Valuation allowance		(28,030,757	)		(227,485,860	)
Deferred tax assets-non-current, net		-			-

Movement of valuation allowances

	As of December 31,
	2010			2011			2012
	RMB			RMB			RMB
At beginning of year		(1,994,833	)		(6,308,714	)		(73,967,071	)
Current year additions		(4,517,852	)		(69,445,609	)		(329,813,147	)
Reversal of valuation allowances		203,971			1,787,252			919,670
At end of year		(6,308,714	)		(73,967,071	)		(402,860,548	)

Valuation allowances were determined by assessing both positive and negative evidence and have been provided on the net deferred tax asset due to the uncertainty surrounding its realization. As of December 31, 2011 and 2012, valuation allowances of RMB73,967,071 and RMB402,860,548 were provided against deferred tax assets because it was more likely than not that such portion of deferred tax will not be realized based on the Group's estimate of future taxable incomes of all its subsidiaries. If events occur in the future that allow the Group to realize more of its deferred tax assets than the presently recorded amount, an adjustment to the valuation allowances will result in a non-cash income statement benefit when those events occur.