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Taxes
 12 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
TAXES

NOTE 8 – TAXES

 

Corporate Income Taxes ("CIT")

 

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Wah Fu is an offshore holding company and is not subject to tax on income or capital gains under the laws of the British Virgin Islands.

 

Wah Fu Holding was incorporated in Hong Kong and is subject to Hong Kong corporate income tax at a rate of 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000.

 

Distance Learning was registered in the PRC and is subject to corporate income tax at a reduced rate of 15% starting from 2014, when it was approved by local government as a High-technology Company. The certificate of High-technology Company will expire in December 2020.

 

Hunan Huafu, Shanghai Xia Shu, Shanghai Xin Fu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu , Laoning Huafu, Guangxi Huafu, Sichuan Huafu and Guangzhou Huafu were registered in the PRC and are subject to corporate income tax at a reduced rate of 10% starting from the inception dates when they were approved by local government as small-scaled minimal profit enterprises. Huaxia MOOC was subject to coporate income tax at a reduced rate of 10% from the inception date till the end of 2019. The income tax rate increased to 25% since 2020. Digital Information was registered in the PRC and is subject to corporate income tax at the rate of 25%.

 

Per share effect of the tax savings were $0.06 for the year ended March 31, 2018.

 

(i) The components of the income tax expense (benefit) are as follows:

 

   For the Year Ended 
   March 31,
2020		   March 31,
2019		   March 31,
2018		 
Current income tax provision  $100,741   $9,627   $247,862 
Deferred income tax provision (benefit)   111,757    (106,431)   (155,839)
Total  $212,498   $(96,804)  $92,023 

 

(ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:

 

   As of
March 31,
2020		   As of
March 31,
2019		 
Allowance for doubtful accounts  $113,062   $129,742 
Deferred revenue   219,177    83,876 
Net operating loss carry-forwards   465,059    402,876 
Total deferred tax asset   797,298    616,494 
Valuation allowance   (525,183)   (213,028)
Deferred tax assets, net  $272,115   $403,466 

 

According to Chinese tax regulations, net operating loss ("NOL") can be carried forward to offset operating income for five years. A valuation allowance is established for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that the realization of future deductions is uncertain. Management performs an assessment over future taxable income to analyze 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 generation of future taxable income during the periods in which those temporary differences become deductible. As of March 31, 2020 and March 31, 2019, valuation allowance accrued for deferred tax assets was $525,183 and $213,028, respectively.

 

(iii) The following table reconciles the PRC statutory rates to the Company's effective tax rate for the years ended March 31, 2020, 2019 and 2018:

 

   For the Years Ended 
   March 31,
2020		   March 31,
2019		   March 31,
2018		 
Statutory PRC income tax rate   25%   25%   25.0%
Favorable tax rate impact (a)   (6.3)%   (11.1)%   (15.3)%
Permanent difference   (4.6)%   (1.6)%   (2.8)%
Change in valuation allowance   (29.0)%   (3.6)%   0.2%
Effective tax rate   (14.9)%   8.7%   7.1%

 

  (a) Distance Learning is subject to a favorable tax rate of 15%; Shanghai Xia Shu, Shanghai Xin Fu, Hunan Huafu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu, Liaoning Huafu and Huafu Silu are subject to a favorable tax rate of 10%.

 

Taxes payable

 

Taxes payable consisted of the following:

 

   As of
March 31,
2020		   As of
March 31,
2019		 
Income tax payable  $274,296   $285,821 
Value added tax payable   26,239    24,585 
Other taxes payable   13,517    8,279 
Total  $314,052   $318,685