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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2013
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
| Year |  | Tax Rate
| 2014 |  | 15%
| 2015 |  | 15%
| 2016 |  | 15%
| Thereafter |  | 25%
Provision For Income Taxes | The provision for income taxes consisted of the following:
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |
Current |  | $ | - |  |  | $ | 1,414,171 |
Deferred |  |  | 1,061,413 |  |  |  | (430,250 | )
Total income tax expense |  | $ | 1,061,413 |  |  | $ | 983,921 |
Schedule of Income Tax Rate Reconciliation | Following is a reconciliation of income taxes calculated at the federal statutory rates to the provision for income taxes:
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |
(Benefit) tax at statutory rate of 25% |  | $ | (4,736,660 | ) |  | $ | 1,400,395 |
Stock based compensation from current and prior years |  |  | 8,534 |  |  |  | 149,644 |
Effect of tax holiday |  |  | 1,834,517 |  |  |  | (655,947 | )
Other, primarily the difference in U.S. tax rates |  |  | - |  |  |  | (70,471 | )
Change in valuation allowance |  |  | 3,955,022 |  |  |  | 160,300 |
Income tax expense |  | $ | 1,061,413 |  |  | $ | 983,921 |
Schedule of Deferred Tax Assets and Liabilities | The temporary differences which give rise to the deferred income tax assets and liability are as follows:
|  | December 31, |
|  | 2013 |  |  | 2012 |
Deferred income tax assets: |  |  |  |  |  |
Allowance for doubtful trade receivables |  | $ | 1,995,243 |  |  | $ | 664,492 |
Allowance for doubtful other receivables |  |  | 6,460 |  |  |  | 7,482 |
Inventory obsolescence reserve |  |  | 1,501,687 |  |  |  | 265,498 |
Expenses not deductible in current year |  |  | 31,143 |  |  |  | 30,200 |
Share based compensation |  |  | - |  |  |  | 45,777 |
PRC net operating loss carry forward |  |  | 328,643 |  |  |  | - |
U.S. net operating loss carry forward |  |  | 1,052,784 |  |  |  | 905,669 |
Total deferred income tax assets |  |  | 4,915,960 |  |  |  | 1,919,118 |
Valuation allowance |  |  | (4,915,960 | ) |  |  | (951,447 | )
Net deferred income tax asset |  | $ | - |  |  | $ | 967,671 |
Deferred income tax liability: |  |  |  |  |  |  |  |
Intangible assets |  | $ | 176,414 |  |  | $ | 95,963 |

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