For the years ended December 31, 2017 and 2016, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:

 

		Years ended December 31,
		2017			2016
Tax jurisdiction from:
- Local		$	(560,363)		$	(202,525)
- Foreign			(1,015,308)			(1,614,808)
Loss before income taxes		$	(1,575,671)		$	(1,817,333)

 

The provision for income taxes consisted of the following:

 

		Years ended December 31,
		2017			2016
Current:
- Local		$	-		$	-
- Foreign			2,744			246
Deferred:
- Local			-			-
- Foreign			-			-
Income tax expense		$	2,744		$	246

 

The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates in various countries: United States of America and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows:

 

 

NFEC is registered in the State of Delaware and is subject to the tax laws of United States of America.

 

On December 22, 2017, the United States Congress enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company has completed the accounting for the effects of the Act during the quarter ended December 31, 2017. The Company’s financial statements for the year ended December 31, 2017 reflect certain effects of the Act which includes a reduction in the corporate tax rate from 34% to 21% as well as other changes.

 

As of December 31, 2017, the operations in the United States of America incurred $3,922,063 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2037, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $823,633 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

 

 

		Years ended December 31,
		2017			2016
Loss before income taxes from PRC operation		$	(1,015,308)		$	(1,614,808)
Statutory income tax rate			25	%		25	%
Income tax expense at statutory rate			(253,827)			(403,702)
Tax effect of non-deductible items			256,571			403,948
Income tax expense		$	2,744		$	246

 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2017 and 2016:

 

		As of December 31,
		2017			2016
Deferred tax assets:
Net operating loss carryforwards
United States – current rate		$	1,333,501		$	1,123,394
United States – effect of change in statutory rate			(509,868)			-
Less: valuation allowance			(823,633)			(1,123,394)
Deferred tax assets		$	-		$	-