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TAXES
 9 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
TAXES

NOTE 16 - 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. Biowin is subject to corporate income tax at a reduced rate of 15% starting from December 2019, when it was approved by local government as a High and New Technology Enterprises (“HNTEs”), to December 2022. In December 2022, the Company successfully renewed its HNTE certification with local government and will continue to enjoy the reduced income tax rate of 15% for another three years through December 2025.

 

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 income tax benefit were as follows:

 

   2023   2022   2023   2022 
  

For the nine months ended

March 31,

  

For the three months ended

March 31,

 
   2023   2022   2023   2022 
Current income tax benefit  $-   $(6,507)  $-   $(29)
Deferred income tax benefit   (33,089)   -    (33,089)   - 
Total income tax benefit  $(33,089)  $(6,507)  $(33,089)  $(29)

 

ii) The components of the deferred tax liability were as follows:

   

March 31,

2023

    

June 30,

2022

  
Deferred tax assets:                
Allowance for doubtful accounts   $ 1,180,479     $ 1,252,245  
Inventory reserve     339,515       311,439  
Net operating loss carry-forwards     1,434,005       979,682  
Total     2,953,999       2,543,366  
Valuation allowance     (2,644,553 )     (2,543,366 )
Total deferred tax assets     309,446       -  
Deferred tax liability:     　          
Intangible assets     (1,866,478 )     -  
Total deferred tax liability     (1,866,478 )     -  
Deferred tax liability, net   $ (1,557,032 )   $ -  

 

 

Movement of the valuation allowance:

 

  

March 31,

2023

  

June 30,

2022

 
         
Beginning balance  $2,543,366   $1,810,023 
Acquisition of Biowin   397,305    - 
Current year addition (reduction)   (233,037)   798,160 
Exchange difference   (63,081)   (64,817)
Ending balance  $2,644,553   $2,543,366 

 

(b) Value-Added Tax

 

The Company is subject to a VAT for selling goods. All of the Company’s products that were sold in the PRC were subject to a Chinese value-added tax at rates ranging from 3% to 13%, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. 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 nine and three months ended March 31, 2023 and 2022, respectively.

 

(c) Taxes Payable

 

Taxes payable consisted of the following:

 

  

March 31,

2023

  

June 30,

2022

 
         
Income tax payable  $986,629   $992,780 
Value added tax payable   27,577    34,925 
Business tax and other taxes payable   1,654    3,375 
Total tax payable   1,015,860    1,031,080 
Less: income tax payable - current portion   569,000    584,220　 
Income tax payable – non-current portion  $446,860   $446,860