Note 8: Income Taxes
The Company accounts for income taxes in accordance with the provisions of FASB ASC 740, Accounting for Uncertainty in Income Taxes. The Company files income tax returns in Singapore and there are currently no federal income tax examinations underway. The Company’s tax year of 2014 and forward are subject to examination by federal taxing authorities for at least five years.
The Company accounts for income taxes using an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The provision for income taxes includes:
|
|
|
2016 |
|
|
2015 |
|
||
|
Taxes – current |
|
$ | - |
|
|
$ | - |
|
|
Taxes – deferred |
|
|
- |
|
|
|
- |
|
|
Income tax expenses |
|
$ | - |
|
|
$ | - |
|
The Company is subject to taxation in the United States and Singapore.
The provision for income taxes differs from the amounts which would be provided by applying the statutory income tax rate of 17% in Singapore and 34% in the United States to the net income (loss) before provision for income taxes for the following reasons:
|
|
|
2016 |
|
|
2015 |
|
||
|
Computed at the statutory rate |
|
$ | 312,803 |
|
|
$ | 30,161 |
|
|
Difference in rates in Singapore |
|
|
(139,261 | ) |
|
|
(5,879 | ) |
|
Non-deductible expenses |
|
|
- |
|
|
|
- |
|
|
Change in valuation allowance |
|
|
(173,542 | ) |
|
|
(24,282 | ) |
|
Actual tax expense |
|
$ | - |
|
|
$ | - |
|
Following are the details of deferred tax assets and its valuation allowance:
|
|
|
December 31, |
|
|
December 31, |
|
||
|
Deferred tax assets |
|
|
|
|
|
|
||
|
Net operating loss carry forwards |
|
$ | 1,161,700 |
|
|
$ | 241,690 |
|
|
Deferred tax asset before valuation allowance |
|
|
223,831 |
|
|
|
50,289 |
|
|
Valuation allowance |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
(50,289 | ) |
|
|
(26,007 | ) |
|
Changes during the period |
|
|
(173,542 | ) |
|
|
(24,282 | ) |
|
Ending balance |
|
|
(223,831 | ) |
|
|
(50,289 | ) |
|
|
|
$ | - |
|
|
$ | - |
|
The related deferred tax benefit on the above unutilized tax losses has a full valuation allowance not recognized against it as there is no certainty of its realization. Management has evaluated tax positions in accordance with ASC 740 and has not identified any significant tax positions, other than those disclosed.
The Company has yet to file its tax return with the Inland Revenue Authority of Singapore for the year of assessment of 2016.
Due to the change in ownership provisions of the income tax laws of United States of America, net operating loss carry forwards of approximately $1,161,700, which expire commencing in fiscal 2035, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.