16. INCOME TAXES

The United States of America

The Company is incorporated in the State of Nevada in the U.S., and is subject to U.S. federal corporate income taxes. The State of Nevada does not impose any state corporate income tax.

The Company's net operating loss for the nine months ended December 31, 2019 amounted to approximately $846,000. As of December 31, 2019, the Company’s net operating loss carryforward for U.S. income taxes was approximately $2.1 million. The net operating loss carryforward is available to reduce future years’ taxable income through year 2039. Management believes that the utilization of the benefit from this loss appears uncertain due to the Company’s operating history. Accordingly, the Company has recorded a 100% valuation allowance on the deferred tax asset to reduce the deferred tax assets to zero on the consolidated balance sheets. As of December 31, 2019 and March 31, 2019, valuation allowances for deferred tax assets were approximately $0.45 million and $0.27 million, respectively. Management reviews the valuation allowance periodically and makes changes accordingly.

PRC

Senmiao Consulting, Sichuan Senmiao, Hunan Ruixi, Ruixi Leasing, Jinkailong, and Yicheng are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. The EIT rate for companies operating in the PRC is 25%.

Income taxes in the PRC are consist of:


	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2019		2018		2019		2018
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Current income tax (benefits) expenses	$	(72,648)	$	—	$	155,722	$	—
Deferred income tax expenses		—		—		(122,772)		—
Total income tax (benefits) expenses	$	(72,648)	$	—	$	32,950	$	—

As of December 31, 2019 and March 31, 2019, the Company’s PRC entities from continuing operations had net operating loss carryforwards of $0 and approximately $123,000, respectively, which will expire in 2023. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. At March 31, 2019, full valuation allowance is provided against the deferred tax assets based upon management's assessment as to their realization. During the nine months ended December 31, 2019, the Company utilized deferred tax assets of approximately $31,000 related to the Company’s net operating loss carryforwards.

The tax effects of temporary differences from continuing operations that give rise to the Company's deferred tax assets are as follows:


	December 31,		March 31,
	2019		2019
	(Unaudited)
Net operating loss carryforwards in the PRC	$	—	$	30,693
Net operating loss carryforwards in the U.S.		449,995		272,258
Less: valuation allowance		(449,995)		(302,951)
	$	—	$	—

As of December 31, 2019 and March 31, 2019, the Company's PRC entities associated with the discontinued P2P lending operations had net operating loss carryforwards of approximately $8.7 million and $3.4 million, respectively, which will expire in 2023. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. At December 31, 2019 and March 31, 2019, full valuation allowance is provided against the deferred tax assets based upon management’s assessment as to their realization.

The tax effects of temporary differences from discontinued operations that give rise to the Company’s deferred tax assets are as follows:


	December 31, 2019		March 31, 2019
	(Unaudited)
Net operating loss carryforwards in the U.S.	$	2,166,677	$	855,483
Less: valuation allowance		(2,166,677)		(855,483)
	$	—	$	—