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Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities | 12 Months Ended
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Sep. 30, 2014
Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities [Text Block] |
15. | Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities
| (a) | Income taxes in the consolidated statements of comprehensive loss
The Company’s provision for income taxes consisted of:
|  |  | 2013 |  |  | 2014 |
| PRC income tax: |  |  |  |  |  |
| Current | $ | 293,678 |  | $ | 16,475 |
| Deferred |  | 5,826,286 |  |  | - |
|  | $ | 6,119,964 |  | $ | 16,475 |
United States Tax China BAK is subject to a statutory tax rate of 35% under United States of America tax law. No provision for income taxes in the United States or elsewhere has been made as China BAK had no taxable income for the years ended September 30, 2013 and 2014. Canada States Tax BAK Canada was subject to a statutory tax rate of 38% under Canada tax law. No provision for income taxes in Canada has been made as BAK Canada had no taxable income for the years ended September 30, 2013 and 2014. German States Tax BAK Europe was subject to a 25% statutory tax rate under Germany tax law. No provision for income taxes in Germany has been made as BAK Europe had no taxable income for the years ended September 30, 2013 and 2014. India Tax BAK India was subject to a 30% statutory tax rate under India tax law. No provision for income taxes in India has been made as BAK India had no taxable income for the years ended September 30, 2013 and 2014. Hong Kong Tax BAK Asia and BAK International are subject to Hong Kong profits tax rate of 16.5% . These two companies did not incur any Hong Kong profits tax during the years ended September 30, 2013 and 2014 as there was no taxable income for BAK Asia and BAK International during these periods. PRC Tax Shenzhen BAK was recognized as a new and high technology enterprise on October 31, 2011 and is entitled to a preferential enterprise income tax rate of 15% for each of the fiscal years 2012, 2013 and is subject to 25% since the fiscal year 2014. All the other subsidiaries in China are subject to an income tax rate of 25%. A reconciliation of the provision for income taxes determined at the statutory income tax rate to the Company's income taxes is as follows:
|  |  | 2013 |  |  | 2014 |
| Loss before income taxes - continuing operations | $ | (110,306,631 | ) | $ | (26,705,038 | )
| United States federal corporate income tax rate |  | 35% |  |  | 35% |
| Income tax credit computed at United States statutory corporate income tax rate |  | (38,607,321 | ) |  | (9,346,763 | )
| Reconciling items: |  |  |  |  |  |
| Valuation allowance on deferred tax assets |  | 37,579,296 |  |  | 6,227,021 |
| Rate differential for PRC earnings |  | 6,753,482 |  |  | 2,574,746 |
| Non-deductible expenses |  | 54,781 |  |  | 530,410 |
| Share based payments |  | 125,652 |  |  | 31,061 |
| Under-provision in prior years |  | 214,074 |  |  | - |
| Provision for income taxes | $ | 6,119,964 |  | $ | 16,475 |
As of September 30, 2013 and 2014, the Company’s U.S. entity had net operating loss carry forwards of $2,511,374 and $35,318,443, respectively, available to reduce future taxable income which will expire in various years through 2034 and the Company’s PRC subsidiaries had net operating loss carry forwards of $105,668,004 and $690,821 which will expires in various years through 2019. Management believes it is more likely than not that the Company will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future. As a result, a valuation allowance was provided against the full amount of the potential tax benefits.
| (b) | Deferred tax assets and deferred tax liabilities
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of September 30, 2013 and, 2014 are presented below:
|  |  | 2013 |  |  | 2014 |
| Deferred tax assets |  |  |  |  |  |
| Short-term |  |  |  |  |  |
| Trade accounts receivable | $ | 5,530,324 |  | $ | - |
| Inventories |  | 5,365,802 |  |  | - |
| Accrued expenses and other payables |  | 865,002 |  |  | - |
| Valuation allowance |  | (11,761,128 | ) |  | - |
| Short-term deferred tax assets |  | - |  |  | - |
| Long-term |  |  |  |  |  |
| Property, plant and equipment |  | 17,826,415 |  |  | - |
| Net operating loss carried forward |  | 26,833,658 |  |  | 12,534,160 |
| Valuation allowance |  | (44,660,073 | ) |  | (12,534,160 | )
| Long-term deferred tax assets | $ | - |  | $ | - |
| Deferred tax liabilities – Long-term |  |  |  |  |  |
| Property, plant and equipment | $ | (779,814 | ) | $ | - |
As of September 30, 2013 and 2014, the Company had no material unrecognized tax benefits which would favorably affect the effective income tax rates in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the years ended September 30, 2013 and 2014, and no provision for interest and penalties is deemed necessary as of September 30, 2013 and 2014. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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