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TAXES PAYABLE | 12 Months Ended
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Jun. 30, 2013
Taxes Payable [Abstract] |
Disclosure of Taxes Payable [Text Block] |
NOTE 10 – TAXES PAYABLE Enterprise Income Tax Effective January 1, 2008, the Enterprise Income Tax (“EIT”) law of the PRC replaced the tax laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”). The EIT rate of 25% replaced the 33% rate that was applicable to both DEs and FIEs. The two year tax exemption and three year 50% tax reduction tax holiday for production-oriented FIEs was eliminated. Since January 1, 2008, Jinong became subject to income tax in China at a rate of 15% as a high-tech company, as a result of the expiration of its tax exemption on December 31, 2007. Accordingly, it made provision for income taxes for the years ended June 30, 2013, 2012, and 2011 of $6,654,038, $6,597,765 and $5,157,185, respectively, which is mainly due to the operating income from Jinong. Gufeng is subject to 25% EIT rate and thus it made provision for income taxes of $3,529,950, $4,203,548 and $3,879,959 for the years ended June 30, 2013, 2012 and 2011, respectively. Jintai has been exempt from paying income tax since its formation as it produces products which fall into the tax exemption list set out in the EIT and it did not generate any operating income since March 2012. This exemption is expected to last as long as the applicable provisions of the EIT do not change. Value-Added Tax All of the Company’s fertilizer products that are produced and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008, the PRC State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”, which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for exemption in May 2009, which was granted effective September 1, 2009, continuing through December 31, 2015. The VAT exemption applies to all agricultural products sold by Jintai, and all but a nominal amount of agricultural products sold by Jinong. Income Taxes and Related Payables Taxes payable consist of the following:
|  | June 30, |  | June 30, |
|  | 2013 |  | 2012 |
VAT provision |  | $ | 36,573 |  | $ | 68,180 |
Income tax payable |  |  | 25,348,794 |  |  | 17,274,817 |
Other levies |  |  | 343,392 |  |  | 332,392 |
Total |  | $ | 25,728,759 |  | $ | 17,675,389 |
The provision for income taxes consists of the following:
|  | Years Ended June 30, |
|  | 2013 |  | 2012 |  | 2011 |
Current tax - foreign |  | $ | 10,183,988 |  | $ | 10,801,313 |  | $ | 9,037,144 |
Deferred tax |  |  | - |  |  | - |  |  | - |
|  | $ | 10,183,988 |  | $ | 10,801,313 |  | $ | 9,037,144 |
The components of deferred income tax assets and liabilities as of June 30, 2013 and 2012 are as follows:
|  | June 30, |  | June 30, |
|  | 2013 |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |
Net operating loss |  | $ | 6,511,141 |  | $ | 5,171,183 |
Total deferred tax assets |  |  | 6,511,141 |  |  | 5,171,183 |
Less valuation allowance |  |  | (6,511,141) |  |  | (5,171,183) |
|  | $ | - |  | $ | - |
The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors. At June 30, 2013, based on the weight of available evidence, including cumulative losses in recent years and expectations of future taxable income, the Company determined that it was more likely than not that its deferred tax assets would not be realized and have a $6.5 million valuation allowance associated with its deferred tax assets. Tax Rate Reconciliation Our effective tax rates were approximately 18.7%, 20.5% and 21.5% for the year ended June 30, 2013, 2012 and 2011, respectively. Substantially all of the Company’s income before income taxes and related tax expense are from PRC sources. Actual income tax benefit reported in the consolidated statements of income and comprehensive income differ from the amounts computed by applying the US statutory income tax rate of 34% to income before income taxes for the years ended June 30, 2013, 2012 and 2011 for the following reasons:
FY 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | China |  |  | United States |  |  |  |  |  |  |
|  | 15% - 25% |  |  | 34% |  |  | Total |  |  |
Pretax income (loss) |  | $ | 58,899,089 |  |  |  |  | $ | (3,941,053) |  |  |  |  | $ | 54,958,036 |  |  |
Expected income tax expense (benefit) |  |  | 14,724,772 |  | 25.0 | % |  |  | (1,339,958) |  | 34.0 | % |  |  | 13,384,814 |  |  |
High-tech income benefits on Jinong |  |  | (4,430,219) |  | (7.5) | % |  |  | - |  | - |  |  |  | (4,430,219) |  |  |
Losses from subsidiaries in which no benefit is recognized |  |  | (110,565) |  | (0.2) | % |  |  | - |  | - |  |  |  | (110,565) |  |  |
Change in valuation allowance on deferred tax asset from US tax benefit |  |  | - |  |  |  |  |  | 1,339,958 |  | (34.0) | % |  |  | 1,339,958 |  |  |
Actual tax expense |  | $ | 10,183,988 |  | 17.3 | % |  | $ | - |  | - | % |  | $ | 10,183,988 |  | 18.5 | %
FY2012 |  | China |  |  | United States |  |  |  |  |  |  |
|  | 15% - 25% |  |  | 34% |  |  | Total |  |  |
Pretax income (loss) |  | $ | 58,465,856 |  |  |  |  | $ | (5,706,718) |  |  |  |  | $ | 52,759,138 |  |  |
Expected income tax expense (benefit) |  |  | 13,189,785 |  | 22.6 | % |  |  | (1,940,284) |  | (34.0) | % |  |  | 11,249,501 |  |  |
High-tech income benefits on Jinong |  |  | (4,439,873) |  | (7.6) | % |  |  | - |  | - |  |  |  | (4,439,873) |  |  |
Losses from subsidiaries in which no benefit is recognized |  |  | 2,051,401 |  | 3.5 | % |  |  | - |  | - |  |  |  | 2,051,401 |  |  |
Change in valuation allowance on deferred tax asset from US tax benefit |  |  | - |  |  |  |  |  | 1,940,284 |  | 34.0 | % |  |  | 1,940,284 |  |  |
Actual tax expense |  | $ | 10,801,313 |  | 18.5 | % |  | $ | - |  | - | % |  | $ | 10,801,313 |  | 20.5 | %
FY 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | China |  |  | United States |  |  |  |  |  |  |  |
|  | 15% - 25% |  |  | 34% |  |  | Total |  |  |  |
Pretax income (loss) |  | $ | 48,782,427 |  |  |  |  | $ | (6,831,182) |  |  |  |  | $ | 41,951,245 |  |  |  |
Expected income tax expense (benefit) |  |  | 12,195,607 |  | 25.0 | % |  |  | (2,322,602) |  | (34.0) | % |  |  | 9,873,005 |  |  |  |
High-tech income benefits on Jinong |  |  | (3,416,976) |  | (7.0) | % |  |  | - |  | - |  |  |  | (3,416,976) |  |  |  |
Losses from subsidiaries in which no benefit is recognized |  |  | 258,513 |  | 0.5 | % |  |  | - |  | - |  |  |  | 258,513 |  |  |  |
Change in valuation allowance on deferred tax asset from US tax benefit |  |  | - |  |  |  |  |  | 2,322,602 |  | 34.0 | % |  |  | 2,322,602 |  |  |  |
Actual tax expense |  | $ | 9,037,144 |  | 18.5 | % |  | $ | - |  | - | % |  | $ | 9,037,144 |  | 21.5 | % |

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