NOTE 15 - INCOME TAXES

6 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Text Block]

NOTE 15 – INCOME TAXES

The provision for income tax was $709,742 and $187,569 for three months ended June 30, 2011 and 2010, respectively, and $1,467,719 and $355,296 for the six months ended June 30, 2011 and 2010, respectively, which arose from foreign income tax incurred and or paid to the Chinese tax authorities. The Company’s income tax was assessed on 25% of net income.

Foreign pretax earnings were $2,760,235 and $615,175 for three months ended June 30, 2011 and 2010, respectively. Foreign pretax earnings were $5,751,772 and $1,288,294 for six months ended June 30, 2011 and 2010, respectively. Pretax earnings of a foreign subsidiary are subject to U.S. taxation when effectively repatriated. The Company provides income taxes on the undistributed earnings of non-U.S. subsidiaries except to the extent such earnings are indefinitely invested outside the United States. At June 30, 2011, approximately $16,488,000 of accumulated unadjusted earnings of non-U.S. subsidiaries was indefinitely invested. At the existing U.S. federal income tax rate, additional taxes of $1,484,000 approximately would have to be provided if such earnings were remitted currently.

The Company did not have any significant temporary differences giving rise to deferred tax liabilities as of June 30, 2011 and 2010.

Reconciliation of the differences between the statutory US Federal income tax rate and the effective rate was as follows for the three and six months ended June 30, 2011 and 2010:

	Three Months						Six Months
	2011			2010			2011			2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
US statutory tax rate		34.0	%		34.0	%		34.0	%		34.0	%
Tax rate difference		-9.0	%		-9.0	%		-9.0	%		-9.0	%
Changes in valuation allowance		1.4	%		8.2	%		1.4	%		8.8	%
Effective Rate		26.4	%		33.2	%		26.4	%		33.8	%

At June 30, 2011, the Company had US net operating loss carry forwards of $599,905. A 100% valuation allowance was recorded against their potential tax benefit due to the uncertainty of its realization.