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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Taxes [Abstract]

(14) 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

Orient Paper HB and Orient Paper 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 provisions for income taxes for three months ended June 30, 2017 and 2016 were as follows:

		Three Months Ended
		June 30,
		2017				2016
Provision for Income Taxes
Current Tax Provision PRC		$	563,588			$	1,377,602
Deferred Tax Provision PRC			(506,107	)			(437,062	)
Total Provision for Income Taxes		$	57,481			$	940,540

The provisions for income taxes for the six months ended June 30, 2017 and 2016 were as follows:

		Six Months Ended
		June 30,
		2017				2016
Provision for Income Taxes
Current Tax Provision PRC		$	1,744,332			$	2,013,868
Deferred Tax Provision PRC			(1,143,569	)			(969,901	)
Total Provision for Income Taxes		$	600,763			$	1,043,967

During the three months ended June 30, 2017 and 2016, the effective income tax rate was estimated by the Company to be 78.3% and 26.7%, respectively. During the six months ended June 30, 2017 and 2016, the effective income tax rate was estimated by the Company to be 25.8% and 46.4%, respectively.

The following table reconciles the PRC statutory rates to the Company's effective tax rate for:

		Three Months Ended June 30,
		2017				2016
PRC Statutory rate			25.0	%			25.0	%
Effect of different tax jurisdiction			(19.3	)			(0.5	)
Effect of expenses not deductible for PRC tax purposes			(0.2	)			-
Under provision in previous years			-				0.2
Change in valuation allowance			72.8				2.0
Effective income tax rate			78.3	%			26.7	%

		Six Months ended June 30,
		2017				2016
PRC Statutory rate			25.0	%			25.0	%
Effect of different tax jurisdiction			(0.2	)			(7.4	)
Effect of expenses not deductible for PRC tax purposes			0.5				0.4
Under provision in previous years			-				0.3
Change in valuation allowance			0.5				28.1
Effective income tax rate			25.8	%			46.4	%

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 June 30, 2017 and December 31, 2016, 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 condensed consolidated financial statements for the three and six months ended June 30, 2017 and 2016, 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.