Income Taxes

12 Months Ended

Apr. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 13 – INCOME TAXES

United States

DTS8 Coffee Company, Ltd. was incorporated in the State of Nevada and is subject to the United States federal income tax. No provision for income taxes in the U.S. has been made as the Company has no U.S. taxable income for the years ended April 30, 2016 and 2015. 

Hong Kong

DTS8 Holdings was incorporated in Hong Kong and, under the current Hong Kong Inland Revenue Ordinance, the Company is subject to 16.5% income tax on its taxable income generated from operations in Hong Kong. For the years ended April 30, 2016 and 2015, no provision for Hong Kong tax has been made as DTS8 Holdings has no taxable income generated from operations in Hong Kong during the year.

People’s Republic of China

The Company’s subsidiaries DTS8 Coffee, a WOFE corporation organized and existing in Shanghai under the laws of the People’s Republic of China, and DTS8 Huzhou, a corporation organized and existing in Nanxun, Huzhou, Zhejiang Province, China, are governed by the Enterprise Income Tax Law of the People’s Republic of China (the “EIT Law”). The Company is subject to tax at a statutory rate of 25% on income reported in the statutory financial statements. The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a foreign-invested enterprise in China to its direct holding company incorporated in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE).

As of April 30, 2016 and 2015, the Company was still in loss position; therefore no deferred tax liability was recognized related to the undistributed earnings subject to withholding tax.

	Year Ended April 30,
	2016		2015
Deferred tax assets
Net operating loss carrying forward	$	9,710	$	51,422
Total deferred tax assets		9,710		51,422
Valuation allowance		(9,710)		(51,422)
Net deferred tax assets	$	-	$	-

Net operating loss carry forward of the Company, amounted to $38,839 and $205,745 for the years ended April 30, 2016 and 2015, respectively. The net operating loss carry forwards are available to be utilized against future taxable income for years through calendar year 2021. In assessing the reliability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled projected future taxable income, and tax planning strategies in making this assessment. As of April 30, 2016 and 2015, deferred income tax assets represented the operating loss carry forward of the Company’s subsidiaries, DTS8 Coffee and DTS8 Huzhou. Management believes that the Company’s cumulative losses arising from recurring business in recent years constituted significant negative evidence that deferred tax assets would not be realizable and this evidence outweighed the expectations that the Company would generate future taxable income. Therefore, a full valuation allowance has been provided against the Company’s deferred income tax assets as of April 30, 2016 and 2015.

The Company accumulated losses for the years ended April 30, 2016 and 2015; therefore no tax provision was provided. The reconciliation between the U.S. statutory income tax rate and the Company’s effective tax rate is as below:

	Year Ended April 30,
	2016		2015
U.S. Federal income tax statutory rate		35%		35%
PRC statutory income tax rate (25%) difference		(10%)		(10%)
Changes in valuation allowance for DTA		(25%)		(25%)
Effective tax rate		0%		0%