XML 31 R25.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES
 12 Months Ended
Sep. 30, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

18.         INCOME TAXES

 

Agritech and its subsidiary, State Harvest are incorporated in the British Virgin Islands and are subject to taxation under the laws of the British Virgin Islands. State Harvest’s subsidiary and State Harvest’s variable interest entity, Beijing Origin and its majority owned subsidiaries (together, the “PRC entities”) were incorporated in the PRC and governed by the PRC laws.

 

The applicable tax rate of the PRC Enterprise Income Tax (“EIT”) was changed from 33% to 25% on January 1, 2008, according to the Corporate Income Tax Law. The preferential tax rate previously enjoyed by the PRC entities is gradually transitioned to the new standard rate of 25% over a five-year transitional period. In addition, article 28 of the new tax law stated that the income tax rate of a “high technology” company (high-tech status) is to remain at 15%.

 

Preferential tax treatment of Beijing Origin as “high technology” company (High-tech Status) has been agreed with the relevant tax authorities. Beijing Origin is entitled to a preferential tax rate of 15% which is subject to annual review. As a result of these preferential tax treatments, the reduced tax rates applicable to Beijing Origin Seed Limited for 2010, 2011 and 2012 are 15%.

 

Had all the above tax holidays and concessions not been available, the tax charges would have been higher by RMB7,648, RMB5,226 and RMB2,012, and the basic net income (loss) per share would have been lower (higher) by RMB0.33, RMB(0.23) and RMB(0.16) for the years ended September 30, 2010, 2011 and 2012, respectively. The diluted net income (loss) per share for the years ended September 30, 2010, 2011 and 2012 would have been lower (higher) by RMB0.33, RMB(0.23) and RMB(0.16), respectively.

 

The Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. Until September 30, 2012, the management considered that the Company had no uncertain tax positions affected its consolidated financial position and results of operations or cash flow other than for the contingent US tax liabilities mentioned under note 21. The Company will continue to evaluate for the uncertain position in future. The estimated interest costs have been provided in the Company’s financial statements up to the year ended September 30, 2012. The Company’s uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities and the major one is the China tax authority. The open tax years for examinations in China are 5 years.

 

 

 

The provision for income taxes expenses consists of the following:

 

    Year ended
September 30,		  
    2010     2011     2012  
    RMB     RMB     RMB  
                   
Current     4,046       6,991       589  
Deferred     5,273       6,739       1,273  
                         
      9,319       13,730       1,862  

 

The principal components of the deferred income tax assets are as follows:

 

    September 30,  
    2011     2012  
    RMB     RMB  
Non-current deferred tax assets:                
Net operating loss carry forward     20,928       33,265  
Impairment on inventory     3,634       5,772  
Others     3,498       6,929  
                 
Non-current deferred income tax assets     28,060       45,966  
Valuation allowances     (25,032 )     (44,211 )
                 
Net non-current deferred income tax assets     3,028       1,755  

 

The Company did not have any significant temporary differences relating to deferred tax liabilities as of September 30, 2011 and 2012.

 

A significant portion of the deferred tax assets recognized relates to net operating loss and credit carry forwards. The Company operates through the PRC entities and the valuation allowance is considered on each individual basis.

 

The net operating loss attributable to those PRC entities can only be carried forward for a maximum period of five years. Tax losses of non-PRC entities can be carried forward indefinitely. The expiration period of unused tax losses is as follows:

 

    Year ended
September 30,		  
    2011     2012  
    RMB     RMB  
Calendar year ending,            
2012     11,694       11,694  
2013     25,586       15,747  
2014     188       -  
2015     11,042       10,997  
2016     45,944       54,491  
2017     -       77,399  
                 
      94,454       170,328  

 

 

Reconciliation between total income tax expenses and the amount computed by applying the statutory income tax rate to income before taxes is as follows:

 

    Year ended
September 30,		  
    2010     2011     2012  
    %     %     %  
                   
Statutory rate     25       25       25  
Effect of preferential tax treatment     (10 )     (550 )     218  
Effect of different tax jurisdiction     4       307       (156 )
Permanent book-tax difference     -       403       1,757  
Effect of changes of applicable tax rate     -       -       -  
Change in valuation allowance     (5 )     998       (2,078 )
Under (over) provision in prior year     (2 )     256       32  
                         
Effective income tax rate     12       1,439       (202 )