Taxes Payable

6 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

TAXES PAYABLE

NOTE 11 – TAXES PAYABLE

Enterprise Income Tax

Effective January 1, 2008, the Enterprise Income Tax (“EIT”) law of the PRC replaced the tax laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”). The EIT rate of 25% replaced the 33% rate that was applicable to both DEs and FIEs. The two-year tax exemption and three-year 50% tax reduction tax holiday for production-oriented FIEs were eliminated. Since January 1, 2008, Jinong became subject to income tax in China at a rate of 15% as a high-tech company, because of the expiration of its tax exemption on December 31, 2007. Accordingly, it made provision for income taxes for the six-month period ended December 31, 2018 and 2017 of $ 1,356,998 and $1,845,926, respectively, which is mainly due to the operating income from Jinong. Gufeng is subject to a 25% EIT rate and thus it made provision for income taxes of $1,071,227 and $1,106,590 for the six months ended December 31, 2018 and 2017, respectively.

Value-Added Tax

Certain fertilizer products that are produced and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008, the PRC State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”, which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for exemption in May 2009, which was granted effective September 1, 2009. 

Income Taxes and Related Payables

	December 31,			June 30,
	2018			2018
VAT provision	$	(343,283	)	$	(449,140	)
Income tax payable		1,598,671			554,065
Other levies		805,609			836,747
Total	$	2,060,997		$	941,672

The provision for income taxes consists of the following

	December 31,		June 30,
	2018		2018
Current tax - foreign	$	3,182,061	$	6,841,592
Repatriation Tax		-		29,010,535
Total	$	3,182,061	$	35,852,127

Our effective tax rates were approximately 21.6% and 20.1% for the six months ended December 31, 2018 and 2017, respectively. Substantially all the Company’s income before income taxes and related tax expense are from PRC sources. Actual income tax benefit reported in the consolidated statements of income and comprehensive income differ from the amounts computed by applying the US statutory income tax rate of 21% to income before income taxes for the three months ended December 31, 2018 and 2017 for the following reasons:

December 31, 2018

Tax Rate Reconciliation

	China					United States
December 31, 2018	15% - 25%					21%					Total
Pretax income (loss)	$	15,663,575					(963,974	)			$	14,699,601
Expected income tax expense (benefit)		3,915,894		25.0	%		(202,435	)	21.0	%		3,713,459
High-tech income benefits on Jinong		(904,666	)	(5.8	)%		-		-			(904,666	)
Losses from subsidiaries in which no benefit is recognized		170,833		1.1	%		-		-			170,833
Change in valuation allowance on deferred tax asset from US tax benefit		-					202,435		(21.0	)%		202,435
Actual tax expense	$	3,182,061		20.3	%	$	-		-	%	$	3,182,061		21.6	%

	China					United States
December 31, 2017	15% - 25%					34%					Total
Pretax income (loss)	$	16,805,296				$	(630,768	)			$	16,174,528
Expected income tax expense (benefit)		4,201,324		25	%		(214,461	)	34	%		3,986,863
High-tech income benefits on Jinong		(1,230,618	)	-7.3	%							(1,230,618	))
Losses from subsidiaries in which no benefit is recognized		282,887		1.7	%							282,887
Change in valuation allowance on deferred tax asset from US tax benefit		0					214,461		-34	%		214,461
Actual tax expense	$	3,253,593		19.4	%	$	0		0.00	%	$	3,253,593		20.1	%