Income taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income taxes

22. Income taxes

The Company is current in its US tax filings, except for its 2020 filing, as of December 31, 2021 and is not current in its Canadian tax filings with the 2019 and 2020 returns still outstanding. 

The income tax provision/ (benefit) is different from that which would be obtained by applying the statutory Federal income tax rate of 21% and applicable state tax rates of 5% to income before income tax expense. The items causing this difference for the years ended December 31, 2021 and 2020 are as follows: 

Schedule of reconciliation of income taxes
	Year ended December 31, 2021			Year ended December 31, 2020
Tax credit at the federal and state statutory rate		478,522			857,250
Prior year over provision		250,000			—
Foreign taxation		(5,309	)		(56,212	)
Permanent differences		(271,310	)		(1,091,032	)
Foreign tax rate differential		(100	)		1,061
Net operating loss utilized		5,594			—
Valuation allowance		(176,494	)		288,933
Net future tax asset		280,903			—

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities at December 31, 2021 and 2020 are as follows:

Schedule of deferred tax assets and liabilities
	December 31, 2021			December 31, 2020
Net operating losses
Net operating loss carry forward		34,278,915			32,968,411
Prior year adjustment to opening balances		—			150,639
Foreign exchange differential		8,466			48,579
Net operating loss utilized		(20,719	)		—
Net taxable loss		678,797			1,111,286
Valuation allowance		(34,945,459	)		(34,278,915	)
Net future tax asset		—			—

The company has established a valuation allowance against its gross deferred tax assets sufficient to bring its net deferred tax assets to zero due to the uncertainty surrounding the realization of such assets. Management has determined it is more likely than not that the net deferred tax assets are not realizable due to the Company’s historical loss position. The valuation allowance for the year ended December 31, 2021 increased by $678,797 due to the additional taxation losses incurred for the year ended December 31, 2021.

As of December 31, 2021, the prior three tax years remain open for examination by the federal or state regulatory agencies for purposes of an audit for tax purposes.

Pursuant to the Internal Revenue Code of 1986, as amended (“IRC”), §382, the Company’s ability to use its net operating loss carry forwards to offset future taxable income is limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year period.

As of December 31, 2021, the Company is in arrears on certain US and Canadian tax filings 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.

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.