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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes | (12) Income Taxes United States Orient Paper and Shengde Holdings are incorporated in the State of Nevada and are subject to the U.S. federal tax and state statutory tax rates up to 34% and 0%, respectively. PRC HBOP and Baoding Shengde are PRC operating companies and are subject to PRC Enterprise Income Tax. Pursuant to the PRC New Enterprise Income Tax Law, Enterprise Income Tax is generally imposed at a statutory rate of 25%. The provision for income taxes for the years ended December 31, 2011, 2010 and 2009 were as follows:
|  | Year Ended |
|  | December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Provision for Income Taxes |  |  |  |  |  |  |  |  |  |  |  |
Current Tax Provision – PRC |  | $ | 7,799,226 |  |  | $ | 5,964,621 |  |  | $ | 4,666,069 |
Deferred Tax Provision |  |  | - |  |  |  | - |  |  |  | - |
Total Provision for Income Taxes |  | $ | 7,799,226 |  |  | $ | 5,964,621 |  |  | $ | 4,666,069 |
Orient Paper, Inc. was incorporated in the United States and has incurred aggregate net operating losses of approximately $5,149,592, $3,533,052 and $1,235,962 for U.S. income tax purposes for the years ended December 31, 2011, 2010 and 2009, respectively. The net operating loss carried forward may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, through 2030, 2029 and 2028. Management believes that the realization of the benefits from these losses, which generally would generate a deferred tax asset if it can be expected to be utilized in the future, appears not more than likely due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset benefit to reduce the asset to zero. Management will review this valuation allowance periodically and make adjustments as warranted. A summary of the otherwise deductible (or taxable) deferred tax items is as follows:
|  | December 31, |
|  | 2011 |  |  | 2010 |
Deferred tax assets (liabilities) – current |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 346 |  |  | $ | 9,384 |
Deferred tax assets - non current |  |  |  |  |  |  |  |
Net Operating Loss Carryover for U.S. income tax purposes |  |  | 1,827,128 |  |  |  | 1,201,238 |
Total deferred tax assets |  |  | 1,827,474 |  |  |  | 1,210,622 |
Less: Valuation allowance |  |  | (1,827,474 | ) |  |  | (1,210,622 | )
Net Operating Loss Carryover for U.S. income tax purposes |  | $ | - |  |  | $ | - |
The following table reconciles the statutory rates to the Company's effective tax rate as of
|  | Year ended |
|  | December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Statutory rate |  |  | 25.0 | % |  |  | 25.0 | % |  |  | 25.0 | %
Effect of different tax jurisdiction |  |  | (0.6 | ) |  |  | (1.0 | ) |  |  | (0.6 | )
Effect of expenses not deductible for PRC tax purposes |  |  | 0.1 |  |  |  | 0.1 |  |  |  | 0.1 |
Effect of income not taxable for PRC tax purposes |  |  | (0.3 | ) |  |  | - |  |  |  | - |
Under provision in previous year |  |  | 0.1 |  |  |  | 0.1 |  |  |  | - |
Change in valuation allowance |  |  | 2.2 |  |  |  | 3.5 |  |  |  | 2.3 |
Effective income tax rate |  |  | 26.5 | % |  |  | 27.7 | % |  |  | 26.8 | %
For U.S. tax purposes, the Company has cumulative undistributed earnings of foreign subsidiaries of approximately $69,816,970 and $46,529,307 as of December 31, 2011 and 2010, respectively, which are included in consolidated retained earnings and will continue to be indefinitely reinvested in international operations. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of these earnings, nor is it practicable to estimate the amount of income taxes that would have to be provided if we concluded that such earnings will be remitted to the U.S. in the future. The Company has adopted ASC Topic 740-10-05, Income Taxes. To date, the adoption of this interpretation has not impacted the Company’s financial position, results of operations, or cash flows. The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of December 31, 2011, management considered that the Company had no uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in future. There are no estimated interest costs and penalties provided in the Company’s consolidated financial statements for the years ended December 31, 2011, 2010 and 2009, respectively. The Company’s tax positions related to open tax years are subject to examination by the relevant tax authorities and the major one is the China Tax Authority.

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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://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 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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 6: 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 7: 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 8: 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=6881521&loc=d3e23780-122690 + Details
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