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INCOME TAXES
 12 Months Ended
Dec. 31, 2015
Notes to Financial Statements  
Note 3 - INCOME TAXES

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2015 and 2014 is as follows:

 

    12/31/2015     12/31/2014  
US                
Income before income taxes   $ (6,687,709 )   $ 7,041,874  
Taxes under statutory US tax rates   $ (2,273,821 )   $ 2,394,237  
Increase (decrease) in taxes resulting from:                
Increase (decrease) in valuation allowance   $ 159,457     $ (8,509 )
Foreign tax rate differential   $ 2,126,593     $ (1,392,850 )
Permanent differences   $ 183     $ 2,026  
State taxes   $ (12,412 )   $ 2,279  
Income tax expense   $ -     $ (997,183 )

 

The increase in the Company's effective tax rate in the previous years was primarily attributable to an increase in revenue in Cyprus, which maintains a corporate income tax rate of 12.5%. The corporate income tax rate in Greece is 26%.The net increase in the valuation allowance was caused by the reversal of certain financial reporting accruals that were not previously deducted for tax.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities consist of the following:

 

    12/31/2015     12/31/2014  
US            
Net operating loss carry forward   $ 247,025     $ 201,457  
Greece                
Net operating loss carry forward     77,319       11,439  
Cyprus                
Net operating loss carry forward     11,018       -  
Total deferred tax asset     335,362       212,896  
Valuation allowance     (335,362 )     (212,896 )
Deferred tax asset, net   $ -     $ -  

 

At December 31, 2015, the Company had US net operating loss carry forwards of approximately $631,777 that may be offset against future taxable income, subject to limitation under IRC Section 382, which begin to expire in 2031. At December 31, 2015, the Company had Greece net operating loss carry forwards of approximately $297,382 that may be offset against future taxable income which begin to expire in 2019. During the period ending December 31, 2015, the Company generated Cyprus net operating loss carry forwards of $88,143 which may be carryforward for five (5) years. The Company does not anticipate to generate taxable income in Cyprus in excess of its Cyprus net operating losses No tax benefit has been reported in the December 31, 2015 or 2014 consolidated financial statements due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence.

 

The Company asserts that it will indefinitely reinvest the unremitted earnings and profits generated by Amplerissimo, their Cyprus subsidiary, in 2015. Accordingly, no US deferred tax liability has been established for the unremitted earnings and profits generated in Cyprus.

 

The Company applied the "more-likely-than-not" recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2015 and December 31, 2014, respectively.

 

The Company has elected to classify interest and penalties that would accrue according to the provisions of relevant tax law as interest and other expense, respectively. As of December 31 2015 the Company has accrued approximately $86,702 in other expense.

 

The Company's tax years since inception through 2015 remain open to examination by most taxing authorities.

 

Taxes payable are $1,032,128 and $1,091,377 as of December 31, 2015 and December 31, 2014, respectively.