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Taxes

9 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

TAXES

NOTE 12 - 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 taxable income. Two VIE entities and Xinjiang Taihe receive a full income tax exemption from the local tax authority of the PRC as agricultural enterprises as long as the favorable tax policy remains unchanged.

On December 22, 2017, the "Tax Cuts and Jobs Act" ("The Act") was enacted, The Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The change in rate has caused us to re-measure the Company's income tax liability and record an estimated income tax expense of US$ 744,766 for the year ended June 30, 2018. In accordance with SAB 118, additional work is necessary to do a more detailed analysis of the Act as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in fiscal 2019 when the analysis is complete. The Company elects to pay the transition tax over an eight year period using specified percentages (eight percent per year for the first five years, 15 percent in year six, 20 percent in year seven, and 25 percent in year eight).

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

		For the nine months ended March 31,								For the three months ended March 31,
		2019				2018				2019				2018
Current income tax provision		$	735,198			$	870,324			$	267,149			$	233,766
Deferred income tax provision (benefit)			(116,693	)			(35,677	)			(92,790	)			5,846
Total		$	618,505			$	834,647			$	174,359			$	239,612

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

		March 31, 2019				June 30, 2018
Deferred tax assets:
Allowance for doubtful accounts		$	140,478			$	22,225
Inventory reserve			240,252				244,832
Net operating loss carry-forwards			531,726				539,061
Total			912,456				806,118
Valuation allowance			(531,726	)			(539,061	)
Total deferred tax assets			380,730				267,057
Deferred tax liability:
Distribution rights			(274,917	)			(278,709	)
Total deferred tax liability			(274,917	)			(278,709	)
Deferred tax assets (liability), net		$	105,813			$	(11,652	)

Movement of the valuation allowance:

		March 31, 2019				June 30, 2018
Beginning balance		$	539,061			$	111,882
Current year addition			-				424,517
Exchange difference			(7,335	)			2,662
Ending balance		$	531,726			$	539,061

(b) Value Added Tax

The Company is subject to a value added tax ("VAT") for selling merchandise. The applicable VAT rate is 17% before May 1, 2018 for products sold in the PRC and decreased to 16% thereafter. 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 commercial practice in 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. There were no assessed penalties during the nine and three months ended March 31, 2019 and 2018.

(c) Taxes Payable

Taxes payable consists of the following:

		March 31, 2019				June 30, 2018
Income tax payable		$	3,388,701			$	3,106,642
Value added tax payable			578,787				562,960
Business tax and other taxes payable			8,893				7,207
Total			3,976,381				3,676,809
Less: current portion			3,291,196				2,991,624
Income tax payable - noncurrent portion		$	685,185			$	685,185

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- References

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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