13. Income taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

13. Income taxes

13. Income taxes

The Company is not current in its tax filings as of December 31, 2016.

The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes “ASC 740”. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Internal Revenue Code Section 382 “IRC 382” places a limitation on the amount of taxable income that can be offset by carry forwards after a change in control (generally greater than a 50% change in ownership).

A reconciliation of income taxes to the income tax recorded is as follows:

	Year ended December 31, 2016	Year ended December 31, 2015
Tax expense at the federal statutory rate	$       (394,991)	$      464,746
Foreign taxation	198,560	(4,647)
Permanent differences	56,768	(26,674)
Timing differences not provided for	-	(176,938)
Foreign tax rate differential	98,381	(5,701)
Valuation allowance	41,282	(250,786)
	$                   -	-

The components of the Company’s deferred taxes asset as at December 31, 2016 and December 31, 2015 are as follows:

	December 31, 2016	December 31, 2015
Deferred tax assets
Net operating  loss carry forward	$    20,198,844	$ 20,021,906
Provisions raised	-	176,938
Taxable income	104,169	-
Valuation allowance	(20,303,013)	(20,198,844)
	$                   -	$                -

As of December 31, 2016, the Company is in arrears on filing its statutory income tax returns and the amounts presented above are based on estimates. The actual losses available could differ from these estimates. In addition, the Company could be subject to penalties for these unfiled tax returns.

During the year ended December 31, 2016, the Company has accrued and expensed $250,000 (2015: $200,000) in penalties and interest attributable to delinquent tax returns. Management believes the Company has adequately provided for any ultimate amounts that are likely to result from audits of these returns once filed; however, final assessments, if any, could be significantly different than the amounts recorded in the financial statements.

The Company operates in foreign jurisdictions and is subject to audit by taxing authorities. These audits may result in the assessment of amounts different than the amounts recorded in the consolidated financial statements. The Company liaises with the relevant authorities in these jurisdictions in regard to its income tax and other returns. Management believes the Company has adequately provided for any taxes, penalties and interest that may fall due.