INCOME TAXES

6 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 5. INCOME TAXES

A reconciliation of income (loss) before income taxes for domestic and foreign locations for six months ended September 30, 2018, and 2017 is as follows:

	2018			2017
		(Unaudited)			(Unaudited)
United States	$	(55,794	)	$	—
Foreign		(671,864	)		—
(Loss) before income taxes	$	(727,658	)	$	—

The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows:

	September 30			September 30
	2018			2017
U.S. federal statutory income tax rate		21	%		34	%
Lower rates in PRC, net		25	%		25	%
Valuation allowance		(25	)%		(25	)%
Effects of tax basis differences		(21	)%		(34	)%
The Company’s effective tax rate		(0	)%		(0	)%

The Company did not recognize deferred taxes since it is not likely to realize such deferred taxes. The deferred tax would only apply to the Company in the U.S., as the Company’s current operations in China are not subject to income tax. Lvxin products sales and services have been exempt from enterprise income tax, according to the “PRC Income Tax Law” Article 27 (1)”, income from agricultural, forestry, animal husbandry and fisheries Industry shall be exempt from business tax.

As of September 30, 2018, the Company has a net operating loss carry forward in the PRC that expires in 2023. As a result, the Company provided a 100% allowance on all deferred tax assets of approximately $168,000 and nil related to its operations in the PRC as of September 30, 2018 and 2017, respectively. The valuation allowance has increased by $168,000 and nil for the six months ended September 30, 2018 and 2017, respectively.

The Company has incurred losses from its United States operations during all periods presented. Accordingly, management provided a 100% valuation allowance of approximately $11,700 and nil against the deferred tax assets related to the Company’s United States operations as of September 30, 2018 and 2017, respectively, because the deferred tax benefits of the net operating loss carry forward in the United States might not be utilized.

The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the firm has significant business operations. The tax years under examination vary by jurisdiction. The table below presents the earliest tax year that remain subject to examination by major jurisdiction. 

U.S. Federal	March 31, 2018
China	March 31, 2018

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred tax assets are also recognized for operating losses and tax credit carryforwards. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some or all of any deferred tax assets will not be realized.

United States

Organic Agricultural Company Limited is subject to the United States tax at the rate of 21%. At September 30, 2018, the Company’s unremitted foreign loss of its PRC subsidiaries totaled approximately $0.45 million and the Company held approximately $0.11 million of cash and cash equivalents in the PRC. These unremitted earnings are planned to be reinvested indefinitely into the operations of the Company in the PRC. While repatriation of cash held in the PRC may be restricted by local PRC laws, most of the Company’s foreign cash balances could be repatriated to the United States but, under current U.S. income tax laws, would be subject to U.S. federal income taxes less applicable foreign tax credits. Determination of the amount of unrecognized deferred U.S. income tax liability on the unremitted earnings is not practicable because of the complexities associated with this hypothetical calculation, and as the Company does not plan to repatriate any cash in the PRC to the United States during the foreseeable future, no deferred tax liability has been accrued.

Samoa

Organic Agricultural (Samoa) Co., Ltd was incorporated in Samoa and, under the current laws of Samoa, it is not subject to income tax.

China

Tianci Liantian and Yuxinqi are subject to a 25% standard enterprise income tax in the PRC. Income tax was nil at September 30, 2018 and 2017.

Lvxin products sales and services have been exempt from enterprise income tax, according to the “PRC Income Tax Law” Article 27 (1), which states that income from agricultural, forestry, animal husbandry and fisheries Industry shall be exempt from business income tax.