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TAXES
 3 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
TAXES

NOTE 15 - 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 the VIEs 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 VIEs 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 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 the Company to re-measure its 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 deferred tax assets were as follows:

 

           
  

September 30,

2022

  

June 30,

2022

 
Deferred tax assets:          
Allowance for doubtful accounts  $1,190,068   $1,252,245 
Inventory reserve   292,503    311,439 
Net operating loss carry-forwards   922,505    979,682 
Total   2,405,076    2,543,366 
Valuation allowance   (2,405,076)   (2,543,366)
Total deferred tax assets  $-   $- 

 

Movement of the valuation allowance:

 

  

September 30,

2022

  

June 30,

2022

 
         
Beginning balance  $2,543,366   $1,810,023 
Current year addition   10,148    798,160 
Exchange difference   (148,438)   (64,817)
Ending balance  $2,405,076   $2,543,366 

 

(b) Value-Added Tax

 

The Company is subject to a VAT for selling merchandise. The applicable VAT rate was 17% before May 1, 2018 for products sold in the PRC and decreased to 16% thereafter, and after April 1, 2019, the tax rate was further reduced to 13% based on the new Chinese tax law. 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 the penalty will be expensed in the period if and when a determination is made by the tax authorities. There were no assessed penalties during the three months ended September 30, 2022 and 2021, respectively.

 

 

(c) Taxes Payable

 

Taxes payable consisted of the following:

 

           
  

September 30,

2022

  

June 30,

2022

 
         
Income tax payable  $978,305   $992,780 
Value added tax payable   32,880    34,925 
Business tax and other taxes payable   4,810    3,375 
Total tax payable   1,015,995    1,031,080 
Less: income tax payable - current portion   569,135    584,220　 
Income tax payable - noncurrent portion  $446,860   $446,860