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Income Taxes

9 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

NOTE 9 – INCOME TAXES

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. The Company's PRC subsidiaries file their income tax returns online with PRC tax authorities. The Company conducts all of its businesses through its subsidiaries and affiliated entities, principally in the PRC.

The Company's US parent company, was incorporated in the US and is subject to U.S. income tax rate of 21% and files U.S. federal income tax return. As of March 31, 2020, the US entity had net operating loss ("NOL") carry forwards for income tax purpose of $261,419. The NOL arising in tax years beginning after 2017 may reduce 80% of a taxpayer's taxable income, and be carried forward indefinitely. Management believes the realization of benefits from these losses remains uncertain due to the parent Company's limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance was provided.

The Company's offshore subsidiary, Shuhai Skill (HK), a HK holding company is subject to 16.5% corporate income tax in HK. Shuhai Beijing received a tax holiday with a 15% corporate income tax rate since it qualified as a high-tech company. Tianjin Information, Xunrui, and Guozhong Times are subject to the regular 25% PRC income tax rate.

As of March 31, 2020, the Company has approximately $5.17 million of NOL related to its HK holding company, PRC subsidiaries and VIEs that expire in years 2019 through 2023. The Company estimated the NOL based on the unaudited financial statements of each entity per PRC GAAP, which the management believes it approximates the financial statements per PRC tax law. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance as of March 31, 2020 and June 30, 2019.

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three and nine months ended March 31, 2020 and 2019:

		Three Months Ended March 31 (Unaudited),								Nine Months Ended March 31 (Unaudited),
		2020				2019				2020				2019
US federal statutory rates			(21.0	)%			(21.0	)%			(21.0	)%			(21.0	)%
Tax rate difference – current provision			(3.1	)			6.0	%			(3.6	)			6.0	%
Effect of PRC tax holiday			0.8	%			-	%			5.2	%			-	%
Valuation allowance			23.3	%			15.0	%			19.4	%			15.0	%
Effective tax rate			-				-				-				-

The Company's net deferred tax asset as of March 31, 2020 and June 30, 2019 is as follows:

		March 31, 2020 (Unaudited)				June 30, 2019
Deferred tax asset – net operating loss		$	901,777			$	1,199,872
Valuation allowance			(901,777	)			(1,199,872	)
Net deferred tax asset		$	-			$	-