XML 39 R23.htm IDEA: XBRL DOCUMENT
v3.3.1.900

INCOME TAX | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Tax Disclosure [Abstract] |
INCOME TAX | 17. INCOME TAX The Company’s Chinese subsidiaries are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally subject to tax at 25% on income reported in the statutory financial statements after appropriate tax adjustments. Under the Chinese tax law, the tax treatment of finance and sales-type leases is similar to US GAAP. However, the local tax bureau continues to treat CREG sales-type leases as operating leases. Accordingly, the Company recorded deferred income taxes. The Company’s subsidiaries generate all of their net income from their PRC operations. Shanghai TCH’s effective income tax rate for 2015 and 2014 was 25%. During 2013, Xi’an TCH was re-approved for high tech enterprise status and enjoyed 15% preferential income tax rate for three years effective January 1, 2013. Huahong, Zhonghong and Erdos TCH’s effective income tax rate for 2015 and 2014 was 25%. Shanghai TCH, Xi’an TCH, Huahong, Zhonghong and Erdos TCH file separate income tax returns. There is no income tax for companies domiciled in the Cayman Islands. Accordingly, the Company’s consolidated financial statements do not present any income tax provisions related to Cayman Islands tax jurisdiction where Sifang Holding is domiciled. The US parent company, China Recycling Energy Corporation, is taxed in the US and, as of December 31, 2015, had net operating loss (“NOL”) carry forwards for income taxes of $14.36 million, which may be available to reduce future years’ taxable income as NOLs can be carried forward up to 20 years from the year the loss is incurred. Our management believes the realization of benefits from these losses may be uncertain due to the US parent company’s continuing operating losses. Accordingly, a 100% deferred tax asset valuation allowance was provided. Consolidated foreign pretax earnings approximated $22.38 and $27.30 million for the years ended December 31, 2015 and 2014, respectively. Pretax earnings of a foreign subsidiary are subject to US taxation when repatriated. The Company provides income taxes on the undistributed earnings of non-US subsidiaries except to the extent that such earnings are indefinitely invested outside the United States. As of December 31, 2015, $114.90 million of accumulated undistributed earnings of non-US subsidiaries were indefinitely invested. At the existing US federal income tax rate, additional taxes of $23.22 million would have to be provided if such earnings were remitted currently. The following table reconciles the US statutory rates to the Company’s effective tax rate for the years ended December 31, 2015 and 2014, respectively:
|  | 2015 |  | 2014 |
US statutory rates |  |  | 34.0 | % |  | 34.0 | %
Tax rate difference – current provision |  |  | (9.3) | % |  | (9.5) | %
Effective tax holiday |  |  | (7.2) | % |  | (8.0) | %
Prior periods income tax adjustment per income tax return filed |  |  | (1.8) | % |  | 1.4 | %
Other |  |  | (2.0) | % |  | 0.4 | %
Effect of tax rate change on deferred tax items |  |  | - | % |  | 3.5 | %
Valuation allowance on PRC NOL |  |  | 0.1 | % |  | - | %
Valuation allowance on US NOL |  |  | 1.2 | % |  | 1.9 | %
Tax per financial statements |  |  | 15.0 | % |  | 23.7 | %
The provision for income taxes expense for the years ended December 31, 2015 and 2014 consisted of the following:
|  | 2015 |  | 2014 |
Income tax expense – current |  | $ | 4,497,150 |  | $ | 5,055,803 |
Income tax expense (benefit) - deferred |  |  | (1,252,455) |  |  | 1,055,464 |
Total income tax expense |  | $ | 3,244,695 |  | $ | 6,111,267 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration