NOTE 10 - TAXES

(a)

Corporate Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled.

Shineco is incorporated in the United States and has no operating activities. Tenet-Jove and its VIEs entities are governed by the Income Tax Laws of the PRC, and are currently subject to tax at a statutory rate of 25% on net income reported after appropriated tax adjustment. Two VIE entities receive a full income tax exemption from the local tax authority of PRC as agricultural enterprises as long as the favorable tax policy remains unchanged.

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

	For the years ended June 30,
	2016		2015
Current income tax provision	$	1,298,472	$	1,189,135
Deferred income tax benefit		(120,765)		(64,419)
Total	$	1,177,707	$	1,124,716

ii)

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

	June 30, 2016		June 30, 2015
Allowance for doubtful accounts	$	123,818	$	22,612
Inventory reserve		203,674		145,073
Impairment of investment		-		61,387
Net operating loss carry-forwards		114,122		108,932
Total		441,614		338,004
Valuation allowance		(114,122)		(108,932)
Deferred tax assets, net	$	327,492	$	229,072

As of June 30, 2016 and 2015, net operating loss carry-forwards allowed by PRC tax authorities was $456,477 and $435,728, respectively. These carryforwards will expire, if not utilized by June 2021 and June 2020, respectively.

Movement of valuation allowance:

	June 30, 2016		June 30, 2015
Beginning balance	$	108,932	$	313,342
Current year addition		13,971		-
Current year reversal		-		(206,724)
Exchange difference		(8,781)		2,314
Ending balance	$	114,122	$	108,932

iii)

The following table reconciles the PRC statutory rates to the Company's effective tax rate for the years ended June 30, 2016 and 2015:

	For the years ended June 30,
	2016			2015
PRC statutory tax rate		25.00	%		25.00	%
Exemption rendered by local tax authorities		(12.56)	%		(11.87)	%
Effective tax rate		12.44	%		13.13	%

(b) Value Added Tax

The Company is subject to a value added tax (“VAT”) for selling merchandise. The applicable VAT rate is 17% for products sold in the PRC. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued.

In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty based on the amount of the taxes which are determined to be late or deficient, and will be expensed in the period if and when a determination is made by the tax authorities.

(c) Taxes Payable

Taxes payable consists of the following:

	June 30, 2016		June 30, 2015

Income tax payable	$	1,201,641	$	982,532
Value added tax payable		69,955		93,292
Business tax and other taxes payable		6,546		429
	$	1,278,142	$	1,076,253