|
10. |
Income Taxes |
Income (loss) before income taxes as shown in the accompanying consolidated statements of comprehensive income (loss) is summarized below for the years ended March 31, 2017 and 2016.
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|
|
2017 |
|
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2016 |
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||
|
Tax jurisdictions from: |
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|
|
|
|
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|
Local |
|
$ | (85,605 | ) |
|
|
(75,251 | ) |
|
Foreign, representing: |
|
|
|
|
|
|
|
|
|
Hong Kong |
|
|
147,073 |
|
|
|
(521,302 | ) |
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The People’s Republic of China |
|
|
(90,885 | ) |
|
|
- |
|
|
Income (loss) before income taxes |
|
$ | (29,417 | ) |
|
|
(596,553 | ) |
The provision (benefit) for income taxes consists of the following for the years ended March 31, 2017 and 2016:
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2017 |
|
|
2016 |
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|
Current: |
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|
|
|
|
|
||
|
Local |
|
$ | - |
|
|
$ | - |
|
|
Foreign, representing: |
|
|
|
|
|
|
|
|
|
Hong Kong |
|
|
- |
|
|
|
(102,836 | ) |
|
The People’s Republic of China |
|
|
- |
|
|
|
- |
|
|
Total current tax |
|
|
- |
|
|
|
(102,836 | ) |
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|
|
|
|
|
|
|
|
|
|
Deferred: |
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|
|
|
|
|
|
|
|
Local |
|
|
- |
|
|
|
- |
|
|
Foreign, representing: |
|
|
|
|
|
|
|
|
|
Hong Kong |
|
|
25,688 |
|
|
16,033 |
|
|
|
The People’s Republic of China |
|
|
- |
|
|
|
- |
|
|
Total deferred tax |
|
|
25,688 |
|
|
16,033 |
|
|
|
|
|
|
|
|
|
|
|
|
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Total income tax expenses (benefit) |
|
$ | 25,688 |
|
|
$ | (86,803 | ) |
The reconciliation of the income tax expense to the amount computed by applying the U.S. statutory federal income tax rate to income (loss) before income taxes is as follows:
|
|
|
2017 |
|
|
2016 |
|
||
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Income tax expense (benefit) at the U.S. statutory tax rate |
|
$ | (10,002 | ) |
|
$ | (202,829 | ) |
|
Valuation allowance on U.S. and PRC net operating loss carryforwards |
|
|
51,826 |
|
|
|
25,585 |
|
|
Impact of foreign operations |
|
|
(17,558 |
) |
|
|
91,228 |
|
|
Other |
|
|
1,422 |
|
|
|
(787 | ) |
|
Income tax expense (benefit) |
|
$ | 25,688 |
|
|
$ | (86,803 | ) |
Man Loong is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income.
SQML is subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%.
The following table sets forth the significant components of the aggregate deferred tax assets and liabilities of the Company as of March 31, 2017 and 2016:
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2017 |
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|
2016 |
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Deferred tax assets: |
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|
|
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|||
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Net operating loss carryforwards: |
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|
|
|
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||||
| -United States of America |
|
|
$ | 156,503 |
|
|
$ | 127,398 |
|
| -Hong Kong |
|
|
|
71,221 |
|
|
|
101,960 |
|
| -The People’s Republic of China |
|
|
|
22,721 |
|
|
|
- |
|
|
Total deferred tax assets |
|
|
|
250,445 |
|
|
|
229,358 |
|
|
Less: valuation allowance |
|
|
|
(179,224 | ) |
|
|
(127,398 | ) |
|
Deferred tax assets |
|
|
$ | 71,221 |
|
|
$ | 101,960 |
|
|
|
|
2017 |
|
|
2016 |
|
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|
Deferred tax liabilities, non-current |
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Property, plant and equipment |
|
$ | 466 |
|
|
$ | 5,517 |
|
At March 31, 2017, the Company had U.S. net operating loss carryforwards of approximately $460,305 which expire in 2036. Based on the available evidence, it is uncertain whether future U.S. taxable income will be sufficient to offset the estimated net loss carryforwards, accordingly, the Company has recorded a valuation allowance of approximately $157,000 as of March 31 2017.
At March 31, 2017 and 2016, the Company’s and Man Loong’s differences between the book and tax basis of equipment gave rise to deferred income tax liability of $466 and $5,517, respectively which are recorded as noncurrent in the accompanying consolidated statements of financial condition. The Company had no other differences between the book and tax basis of liabilities as of March 31, 2017 and 2016.