INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES

INCOME TAXES

NOTE – 12 INCOME TAXES

For the years ended December 31, 2012 and 2011, the local (United States) and foreign components of loss from operations before income taxes were comprised of the following:

	Years ended December 31,
	2012		2011
Tax jurisdictions from:
- Local	$	(49,393)	$	-
- Foreign, representing
British Virgin Island		(87,908)		(56,788)
Hong Kong		(3,153)		(10,583)
The PRC		(1,234,478)		(2,226,854)
Loss before income taxes	$	(1,374,932)	$	(2,294,225)

The provision for income taxes consisted of the following:

	Years ended December 31,
	2012		2011
Current:
- Local	$	-	$	-
- Foreign, The PRC		322,091		323,317
Deferred:
- Local		-		-
- Foreign		-		-
Income tax expense	$	322,091	$	323,317

The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, BVI, Hong Kong and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows:

United States of America

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of December 31, 2012, the Company incurred $49,393 of aggregate net operating loss carryforward available to offset its taxable income for income tax purposes. The Company has provided for a full valuation allowance against the deferred tax assets of $17,288 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

British Virgin Island

Under the current BVI law, BSL is not subject to tax on its income or profits.

Hong Kong

GWIL is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income.

The PRC

The Company generated its income from its subsidiaries and VIEs operating in the PRC for the years ended December 31, 2012 and 2011. All entities in the PRC are subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%. A reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2012 and 2011 is as follows:

	Years ended December 31,
	2012		2011
Loss before income taxes	$	(1,234,478)	$	(2,226,854)
Statutory income tax rate		25%		25%
Income tax expense at the statutory rate		(308,620)		(556,714)
Net operating loss not recognized as deferred tax asset		335,892		456,188
Non-deductible items		443,928		420,586
Tax adjustments		(148,299)		3,257
Income tax expense	$	322,901	$	323,317

The following table sets forth the significant components of the aggregate net deferred tax assets of the Company as of December 31, 2012 and 2011:

	As of December 31,
	2012		2011
Deferred tax assets:
Net operating loss carryforwards from the PRC	$	396,727	$	256,411
Less: valuation allowance		(396,727)		(256,411)
Deferred tax assets	$	-	$	-

As of December 31, 2012, the Company incurred $1,586,908 of aggregate net operating loss carryforward available to offset its taxable income for income tax purposes. The Company has provided for a full valuation allowance against the deferred tax assets of $396,727 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. For the year ended December 31, 2012, the valuation allowance was increased by $140,316, primarily relating to net operating loss carryforward in the foreign tax regime.