INCOME TAX

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Note 9 - INCOME TAX

China Changjiang is incorporated in the United States and has incurred net operating income of nil, as for income tax purposes, both for the years ended December 31, 2015 and 2014. The Company's other subsidiaries are subject to income tax described below.

Hong Kong

Wah Bon is incorporated in Hong Kong and subject to Hong Kong profits tax. Wah Bon has no operating profit or tax liabilities during the years ended December 31, 2015 and 2014.

PRC

On March 16, 2007, the National People's Congress passed the Enterprise Income Tax Law ("the China EIT Law"), which was effective as of January 1, 2008.

Shaanxi Pacific, Shaanxi Changjiang and Changjiang PV are incorporated in the PRC and subject to 25% China statutory tax rate. Shaanxi Pacific did not incur any operating income for the years ended December 31, 2015 and 2014. Shaanxi Changjiang incurred net loss, for income tax purpose, for the year ended December 31, 2015, and had net income for the year ended December 31, 2014. Changjiang PV had net losses for the year ended December 31, 2015 and 2014.

The China EIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose "de facto management body" is located in the PRC be treated as a resident enterprise for PRC tax purpose and consequently be subject to the PRC income tax at the rate of 25% for its worldwide income. The Implementing Rules of the China EIT Law merely defines the location of the "de facto management body" as "the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located." On April 22, 2009, the PRC State Administration of Taxation further issued a notice entitled "Notice regarding Recognizing Offshore-Established Enterprises Controlled by PRC Shareholders as Resident Enterprises Based on Their place of Effective Management." Under this notice, a foreign company controlled by a PRC company or a group of PRC companies shall be deemed as a PRC resident enterprise, if (i) the senior management and the core management departments in charge of its daily operations mainly function in the PRC; (ii) its financial decisions and human resource decisions are subject to decisions or approvals of persons or institutions in the PRC; (iii) its major assets, accounting books, company sales, minutes and files of board meetings and shareholders' meetings are located or kept in the PRC; and (iv) more than half of the directors or senior management personnel with voting rights reside in the PRC. Based on a review of surrounding facts and circumstances, the Company does not believe that it is likely that its operations outside of the PRC should be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history of the China EIT Law, should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to September 19, 2008.

The China 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. Such withholding income tax was exempted under the previous income tax regulations. The United States of America, where the Company is incorporated, has such tax treaty with China.

As no entities had any net income, the Company did not provide any income tax expense for the year ended December 31, 2015. And the Company also did not provide income tax expense for the year ended December 31, 2014 due to the use of net loss carry-forwards from prior years.

The following table reconciles the statutory U.S. federal income tax rate to the Company's effective income tax rate

	For the year ended December 31, 2015			For the year ended December 31, 2014
U.S. Federal statutory rate		35	%		35	%
PRC Statutory rate (25%) difference		-10	%		-10	%
Changes in valuation allowance for DTA		-25	%		-25	%
Effective income tax rate		0	%		0	%

As of December 31, 2015, the Company's PRC subsidiaries had net taxable operating loss carry-forwards of approximately $1,505,660. The PRC Income Tax allows the enterprises to offset their future taxable income with taxable operating losses carried forward in a 5-year period. The Management believes that the Company's cumulative losses arising from recurring business in recent years constituted significant negative evidence that most of the deferred tax assets would not be realizable and this evidence outweighed the expectations that the Company would generate future taxable income. The valuation allowance of $376,415 was recorded.

Components of the Company's net deferred tax assets are set forth below:

	December 31, 2015			December 31, 2014
Deferred tax assets
Net operating loss carry-forwards	$	376,415		$	185,148
Total of deferred tax assets	$	376,415		$	185,148
Less: valuation allowance	$	(376,415	)	$	(185,148	)
Net deferred assets	$	-		$	-

Accounting for Uncertainty in Income Taxes

The Company adopted the provisions of Accounting for Uncertainty in Income Taxes. The provisions clarify the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with the standard "Accounting for Income Taxes," and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of Accounting for Uncertainty in Income Taxes also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Based on the Company's evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions. In the event it receives an assessment for interest and/or penalties, it will be classified in the financial statements as tax expense.