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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2012
INCOME TAXES (Tables) |
Current Taxes | 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 |
2013 |  | 15%
2014 and after |  | 25%
Provision For Income Taxes | The provision for income taxes consisted of the following:
|  | Years Ended December 31,
|  | 2012 |  | 2011
Current |  | $ 1,414,171 |  | $ 3,458,568
Deferred |  | (430,250) |  | (16,213)
Total income tax expense |  | $ 983,921 |  | $ 3,442,355
Effective Income Tax Rate Reconciliation. | Following is a reconciliation of income taxes calculated at the federal statutory rate to the provision for income taxes:
|  | Years Ended December 31,
|  | 2012 |  | 2011
Tax at statutory rate of 25% |  | $ 1,400,395 |  | $ 5,677,999
Non-deductible stock-based compensation from |  |  |  |
current and prior years |  | 149,644 |  | 261,122
Effect of tax holiday |  | (655,947) |  | (2,330,566)
Other, primarily the effect of US tax rates |  | (70,471) |  | -
Change in valuation allowance |  | 160,300 |  | (166,200)
Income tax expense |  | $ 983,921 |  | $ 3,442,355
Deferred Tax Assets and Liabilities. | The temporary differences which give rise to the deferred income tax assets and liability are as follows:
|  | December 31,
|  | 2012 |  | 2011
Deferred income tax assets: |  |  |  |
Allowance for doubtful trade receivables |  | $ 664,492 |  | $ 530,461
Allowance for doubtful other receivables |  | 7,482 |  | 5,838
Inventory obsolescence reserve |  | 265,498 |  | -
Expenses not deductible in current year |  | 30,200 |  | 29,927
Share based compensation |  | 45,777 |  | 172,911
U.S. net operating loss carry forwards |  | 905,669 |  | 618,236
Total deferred income tax assets |  | 1,919,118 |  | 1,357,373
Valuation allowance |  | (951,447) |  | (791,147)
Net deferred income tax asset |  | $ 967,671 |  | $ 566,226
Deferred income tax liability: |  |  |  |
Intangible assets |  | $ 95,963 |  | $ 128,909

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