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Income Taxes
 6 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

11. INCOME TAXES

 

Cayman Islands

 

The Company was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

 

Hong Kong

 

On March 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) which introduces the two-tiered profits tax rates regime. The Bill was signed into law on March 28, 2018 and was announced on the following day. Under the two-tiered profits tax rates regime, the first 2 million Hong Kong Dollar (“HKD”) of profits of the qualifying group entity will be taxed at 8.25%, and profits above HKD2 million will be taxed at 16.5%.

 

PRC

 

Generally, WFOE, Pop Culture, Shanghai Pudu, Pop Network, Guangzhou Shuzhi, Shenzhen Pop, Xiamen Sikai, and Shenzhen Jam Box, which were incorporated in PRC, are subject to enterprise income tax on their taxable income as determined under PRC tax laws and accounting standards at a rate of 25%.

 

According to Taxation 2019 No. 13 which was effective from January 1, 2019 to December 31, 2021, an enterprise is recognized as a small-scale and low-profit enterprise when its taxable income is less than RMB3 million. A small-scale and low-profit enterprise receives a tax preference including a preferential tax rate of 5% on its taxable income below RMB1 million and another preferential tax rate of 10% on its taxable income between RMB1 million and RMB3 million. And in 2021, the preferential tax rate is reduced by half. During the fiscal year ended June 30, 2020, Pop Network, Shanghai Pudu, and Guangzhou Shuzhi were qualified as small-scale and low-profit enterprises, and during the six months ended December 31, 2021, Pop network was qualified as small-scale and low-profit enterprises.

 

i) The components of the income tax provision are as follows:

 

   For the
Six Months Ended
December 31,		 
   2021   2020 
Current income tax provision  $769,748   $724,899 
Deferred income tax benefit   (257,489)   (38,797)
Total  $512,259   $686,102 

 

The following table reconciles the statutory rate to the Company’s effective tax rate for the six months ended December 31, 2021 and 2020:

 

   For the
Six Months Ended
December 31,		 
   2021   2020 
China Statutory income tax rate   25.00%   25.00%
Permanent difference   0.20%   1.49%
Effect of favorable tax rates on small-scale and low-profit entities   0.01%   (4.01)%
Effective tax rate   25.21%   22.48%

 

The tax effect of temporary difference under ASC 740 “Accounting for Income Taxes” that gives rise to deferred tax asset as of December 31, 2021 and June 30, 2021 was as follows: 

 

   As of
December 31,		   As of
June 30,		 
   2021   2021 
         
Deferred tax assets:        
Net operating loss carry forwards  $
-
   $107 
Allowance for doubtful accounts   403,302    140,650 
Total deferred tax assets   403,302    140,757 
Valuation allowance   
-
    
-
 
Total deferred tax assets, net  $403,302   $140,757