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INCOME TAX
9 Months Ended
Sep. 30, 2011
INCOME TAX [Text Block]

NOTE 8: INCOME TAX

Leading Asia is registered in BVI and under the current laws of the BVI, is not subject to income taxes.

Good Wealth is a holding company registered in Hong Kong and has no operating profit for tax liabilities.

TMK Shenzhen is registered in the PRC and has tax advantages granted by the local government for corporate income taxes and sales taxes commencing 2005. The Company was entitled to have a full tax exemption for the first two profitable years, followed by a 50% reduction on normal tax rate of 24% for the following three consecutive years. The Company was approved by local government as a high-tech company and granted tax benefits for corporate income taxes and sales taxes commencing 2007.

Borou is registered in PBC and is subject to regular corporate income tax rate. The assessment of its tax liabilities is combined with that of TMK Shenzhen.

Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law has replaced the old laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”). The new standard EIT rate of 25% replaces the 33% rate applicable to both DES and FIEs, except for High Tech companies that pay a reduced rate of 15%, subject to government verification for Hi-Tech company status in every three years. Companies established before March 16, 2007 continue to benefit from tax holiday treatment approved by the local government for a grace period of either the next 5 years or until the tax holiday term is completed, whichever is sooner.

A reconciliation between the income tax computed at the PRC statutory rate and the Company’s provision for income tax is as follows:

    For Three Months Ended     For Nine Months Ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
                         
U.S. statutory rate   34.0%     34.0%     34.0%     34.0%  
Foreign income not recognized in the U.S.   -34.0%     -34.0%     -34.0%     -34.0%  
PRC preferential enterprise income tax rate   25.0%     25.0%     25.0%     25.0%  
Tax holiday and relief granted to the Subsidiary   -10.0%     -10.0%     -10.0%     -10.0%  
Other   -2.6%     -0.5%     -1.0%     -0.3%  
Provision for income tax   12.4%     14.5%     14.0%     14.7%  

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises have completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities.

Accounting for Uncertainty in Income Taxes

Based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements.