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Income Taxes | 9 Months Ended
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Mar. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 10 – 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 U.S. parent company is subject to U.S. income tax rate of 21% and files U.S. federal income tax return. As of March 31, 2021, the U.S. entity had net operating loss (“NOL”) carry forwards for income tax purposes of $769,364. The NOL arising in tax years beginning after 2017 may reduce 80% of a taxpayer’s taxable income, and be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. 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, Guozhong Times, Guozhong Haoze, Guohao Century, Jingwei, Shuhai Nanjing, Zhangxun are subject to the regular 25% PRC income tax rate. As of March 31, 2021, the Company has approximately $7.53 million of NOL from its HK holding company, PRC subsidiaries and VIEs that expire in calendar years 2020 through 2024. 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 depends 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, 2021 and June 30, 2020. The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the nine months ended March 31, 2021 and 2020:
|  | 2021 |  |  | 2020 |
US federal statutory rates |  |  | (21.0 | )% |  |  | (21.0 | )%
Tax rate difference – current provision |  |  | (3.3 | )% |  |  | (3.1 | )%
Permanent difference |  |  |  | % |  |  | - | %
Effect of PRC tax holiday |  |  | 3.4 | % |  |  | 0.8 | %
Valuation allowance |  |  | 20.9 | % |  |  | 23.3 | %
Effective tax rate |  |  | - | % |  |  | - | %
The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the three months ended March 31, 2021 and 2020:
|  | 2021 |  |  | 2020 |
US federal statutory rates |  |  | (21.0 | )% |  |  | (21.0 | )%
Tax rate difference – current provision |  |  | (3.4 | )% |  |  | (3.6 | )%
Permanent difference |  |  |  | % |  |  | - | %
Effect of PRC tax holiday |  |  | 3.5 | % |  |  | 5.2 | %
Valuation allowance |  |  | 20.9 | % |  |  | 19.4 | %
Effective tax rate |  |  | - | % |  |  | - | %
The Company’s net deferred tax assets as of March 31, 2021 and June 30, 2020 is as follows:
|  | March 31, 2021 |  |  | June 30, 2020 |
Deferred tax asset |  |  |  |  |  |  |  |
Net operating loss |  | $ | 1,507,555 |  |  | $ | 1,048,593 |
R&D expense |  |  | 123,750 |  |  |  | 115,500 |
Accrued expense of officers’ salary |  |  | 26,365 |  |  |  | 13,984 |
Depreciation and amortization |  |  | 8,219 |  |  |  | 8,219 |
Inventory impairment |  |  | 10,966 |  |  |  | 10,966 |
ROU |  |  | 12,667 |  |  |  | - |
Total |  |  | 1,689,522 |  |  |  | 1,197,262 |
Less: valuation allowance |  |  | (1,689,522 | ) |  |  | (1,197,262 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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