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Note 10 - Income Tax
 6 Months Ended
Jun. 30, 2012
Income Tax Disclosure [Text Block]
Note 10 – Income Tax

The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Deer, the U.S. parent company, was incorporated in the U.S. and has net operating losses (NOL) for income tax purposes. Deer has net operating loss carry forwards for income taxes of $745,963 at June 30, 2012, which may be available to reduce future years’ taxable income as NOL; NOL can be carried forward up to 20 years from the year the loss is incurred. Management believes the realization of benefits from these losses remains uncertain due to Deer’s limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance has been provided.

Deer International was incorporated in the BVI and there is no income tax for a company domiciled in the BVI. Accordingly, the Company’s consolidated financial statements do not present any income tax provisions related to the BVI tax jurisdiction where Deer International is domiciled.

Local PRC Income Tax

Pursuant to the tax laws of China, general enterprises are subject to income tax at an effective rate of 25%. Winder enjoyed a 15% preferential income tax effective as of 2009 until expiration on December 31, 2011.  For the period ended June 30, 2012, Winder used standard tax rate of 25% to record income tax expenses.

The following is a reconciliation of tax at the U.S. federal statutory rate to the provision for income tax recorded in the consolidated financial statements for the six and three months ended June 30, 2012 and 2011:

  
 
Six Months
   
Three Months
 
   
2012
   
2011
   
2012
   
2011
 
Tax provision at U.S. statutory rates
   
34
%
   
35.2
%
   
34
%
   
36.2
%
Foreign tax rate difference
   
(9.4
)%
   
(9.3
)%
   
(9.6
)%
   
(9.3
)%
Other
   
(0.7)
%
   
2.2
%
   
(2.3)
%
   
2.0
%
Valuation allowance
   
2.0
%
   
0.7
%
   
2.9
%
   
0.6
%
Effective tax holiday
   
0
%
   
(10.6
)%
   
0
%
   
(10.6
)%
Tax per financial statements
   
25.9
%
   
18.2
%
   
25.0
%
   
18.9
%