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TAXES
 3 Months Ended
Sep. 30, 2024
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. Shineco Life is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000. 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 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. The subsidiaries of Wintus in the PRC 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, except certain subsidiaries that are recognized as small low-profit enterprises. According to the relevant PRC tax policies, once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the taxable income not more than RMB3 million is subject to a reduced effective rate of 5% during the period from January 1, 2023 to December 31, 2024.

 

 

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 provision (benefit) were as follows:

 

         
   For the three months ended September 30, 
   2024   2023 
Current income tax provision  $481   $- 
Deferred income tax benefit   (293,432)   (251,366)
Total income tax benefit   (292,951)   (251,366)
Less: income tax provision, held for discontinued operations   -    - 
Income tax benefit, held for continuing operations  $(292,951)  $(251,366)

 

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

 

   September 30, 2024   June 30, 2024 
Deferred tax assets:          
Allowance for credit loss/doubtful accounts  $505,316   $352,077 
Inventory reserve   -    1,522 
Net operating loss carry-forwards   1,517,475    1,187,887 
Total   2,022,791    1,541,486 
Valuation allowance   (1,559,787)   (1,110,668)
Total deferred tax assets   463,004    430,818 
Deferred tax liability:   　    　 
Intangible assets   (9,989,025)   (10,266,124)
Total deferred tax liability   (9,989,025)   (10,266,124)
Deferred tax liability, net  $(9,526,021)  $(9,835,306)

 

Movement of the valuation allowance:

 

   September 30, 2024   June 30, 2024 
         
Beginning balance  $1,110,668   $2,471,066 
Acquisition of subsidiaries   -    154,481 
Disposal of Tenet Jove   -    (2,392,580)
Current year addition   409,130    881,746 
Exchange difference   39,989    (4,045)
Valuation allowance  $1,559,787   $1,110,668 

 

 

(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 three months ended September 30, 2024 and 2023, respectively.

 

(c) Taxes Payable

 

Taxes payable consisted of the following:

 

   September 30, 2024   June 30, 2024 
         
Income tax payable  $1,284,580   $1,268,904 
Value added tax payable   254,432    303,739 
Business tax and other taxes payable   2,289    1,178 
Total tax payable  $1,541,301   $1,573,821 
    　    　 
Income tax payable - current portion  $1,355,110   $1,387,630 
    　      
Income tax payable – non-current portion  $186,191   $186,191