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INCOME TAXES
 6 Months Ended
Jun. 30, 2012
INCOME TAXES  
INCOME TAXES

NOTE 8 - INCOME TAXES

 

Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income in the period that includes the enactment date.

 

Undistributed earnings of Helpson, the Company’s foreign subsidiary, since its acquisition, amounted to approximately $113.0 million at June 30, 2012. Those earnings, as well as the investment in Helpson of approximately $23.3 million, are considered to be indefinitely reinvested and, accordingly, no U.S. federal or state income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. federal and state income taxes (net of an adjustment for foreign tax credits) and withholding taxes payable to the PRC. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation; however, unrecognized foreign tax credits may be available to reduce a portion of the U.S. tax liability.

 

 

Under current tax law in the PRC, the Company is and will be subject to the following enterprise income tax rates:

 

 

 

Enterprise Income Tax Rate

Year

 

 

2012

 

15%

2013

 

15%

2014 and after

 

25%

 

The provision for income taxes consisted of the following:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2012

 

 

2011

 

 

2012

 

 

2011

 

Current

 

$

394,254

 

 

$

871,085

 

 

$

959,147

 

 

$

1,725,879

 

Deferred

 

 

(21,322

)

 

 

17,805

 

 

 

(55,634

)

 

 

16,391

 

Total income tax expense

 

$

372,932

 

 

$

888,890

 

 

$

903,513

 

 

$

1,742,270

 

 

The Company has also incurred various other taxes, comprised primarily of business taxes, value-added taxes, urban construction taxes, education surcharges and others. Any unpaid amounts are reflected on the balance sheets as accrued taxes payable.