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Note 6 - Income Taxes | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
6. | Income taxes
Cayman Islands The Company is incorporated in the Cayman Islands, and is not subject to income tax under the current laws of the Cayman Islands. British Virgin Islands BeyondSpring Ltd. and BVI Biotech are incorporated in the British Virgin Islands, and are not subject to income tax under the current laws of the British Virgin Islands. U.S. BeyondSpring US is incorporated in Delaware, the U.S. It is subject to corporate income tax at a rate of 35%. BeyondSpring US had no taxable income for all years presented and therefore, no provisions for income taxes were recorded. Australia BeyondSpring Australia incorporated in Australia is subject to corporate income tax at a rate of 30%. BeyondSpring Australia has no taxable income for all years presented and therefore, no provision for income taxes is required. Hong Kong BeyondSpring HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax at 16.5% on its taxable income calculated in accordance with the relevant Hong Kong tax laws. BeyondSpring HK has no taxable income for all years presented and therefore, no provision for income taxes is required. PRC Wanchun Shenzhen and Wanchunbulin are PRC companies and are subject to PRC income tax at the statutory rate of 25%. The components of losses before income taxes are as follows:
|  |  | Year Ended December 31,
|  |  | 2014 |  |  |  | 2015 |  |  |  | 2016 |
Cayman Islands |  |  | 58 |  |  |  | 489 |  |  |  | 894 |
U.S. |  |  | 1,983 |  |  |  | 5,921 |  |  |  | 9,840 |
PRC |  |  | 972 |  |  |  | 1,642 |  |  |  | 1,338 |
Australia |  |  | - |  |  |  | - |  |  |  | 473 |
Net loss before income taxes |  |  | 3,013 |  |  |  | 8,052 |  |  |  | 12,545 |
There were no provisions for current and deferred income taxes because the Company and all of its subsidiaries were losses making and were at cumulative losses for the years presented.
A reconciliation of the differences between income tax expenses and the amounts computed by applying the U.S. corporate income tax rate of 35% is as follows:
|  |  | Year Ended December 31, |
|  |  | 2014 |  |  |  | 2015 |  |  |  | 2016 |
Net loss before income taxes |  |  | 3,013 |  |  |  | 8,052 |  |  |  | 12,545 |
Expected income tax benefit |  |  | 1,055 |  |  |  | 2,818 |  |  |  | 4,391 |
Tax rate differential |  |  | 95 |  |  |  | 297 |  |  |  | 581 |
Non-deductible expenses |  |  | (240 | ) |  |  | (351 | ) |  |  | (152 | )
Others |  |  | (5 | ) |  |  | 28 |  |  |  | (63 | )
Change in valuation allowance |  |  | (905 | ) |  |  | (2,792 | ) |  |  | (4,757 | )
Total income tax benefit |  |  | - |  |  |  | - |  |  |  | - |
Net deferred tax assets as of December 31, 2015 and 2016 consisted of the following:
|  |  | December 31, |
|  |  | 2015 |  |  |  | 2016 |
Deferred tax assets, non-current portion: |  |  |  |  |  |  |  |
Net operating loss carryforward |  |  | 3,811 |  |  |  | 8,317 |
Intangible asset |  |  | 586 |  |  |  | 428 |
Deferral of tax deduction of R&D expense |  |  | - |  |  |  | 409 |
Less: valuation allowance |  |  | (4,397 | ) |  |  | (9,154 | )
Net deferred tax assets |  |  | - |  |  |  | - |
Valuation allowances have been provided on the deferred tax assets where, based on all available evidence, it was considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The Company recorded a full valuation allowance against deferred tax assets. For the years ended December 31, 2015 and 2016, the increases in valuation allowance were $2,369 and $4,757, respectively. The change in valuation allowance for the year ended December 31, 2015 was primarily due to the net effect of an additional valuation allowance of $2,792 recorded in the profit or loss against the deferred tax assets of subsidiaries with cumulative losses and a net decrease in valuation allowance of $423 as a result of decrease in deferred tax assets arising from the decrease in deductible temporary differences following the Group’s additional investment in Wanchun Pharma in 2015. The change in valuation allowance for the year ended December 31, 2016 was primarily due to the additional valuation allowance of $4,757 recorded in the profit or loss against the deferred tax assets of subsidiaries with cumulative losses. As of December 31, 2016, the Company had U.S. and PRC tax loss carryforwards of approximately $17,853 and $648, respectively. The U.S. unused tax losses can be carryforward for 20 years and will start to expire in 2033 if not utilized. Whereas the PRC unused tax losses can be carryforward for 5 years and $617 will expire in 2020 if not utilized.
As of December 31, 2015 and 2016, the Company determined that it had no material unrecognized tax benefit and accordingly no material related interest and penalty. Management does not expect that the amount of unrecognized tax benefit will increase significantly within the next 12 months. The Company’s U.S. subsidiary and Australian and PRC subsidiaries filed income tax returns in the U.S., Australia and PRC, respectively. BeyondSpring US is subject to U.S. federal and state income tax examination by tax authorities for tax years beginning in 2013. BeyondSpring Australia’s 2016 tax returns are open to examination by Australian Taxation Office. For Wanchun Shenzhen and Wanchunbulin, their 2015 and 2016 tax returns are open to examination by the PRC taxing authorities.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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