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Taxes

12 Months Ended

Dec. 31, 2021

Note 19 – Taxes

Prepaid taxes

Prepaid taxes as of December 31, 2021 and 2020 consist of the following:


	December 31,		December 31,
	2021		2020
Prepaid value-added tax	$	1,609,466	$	1,046,667

Total	$	1,609,466	$	1,046,667

Taxes Payable

Taxes payable as of December 31, 2021 and 2020 consist of the following:


	December 31,		December 31,
	2021		2020
Corporation income tax payable	$	578,445	$	415,488
Other tax payable		245,256		155,866
Total	$	823,701	$	571,354

Corporation Income Tax (“CIT”)

Tantech BVI was incorporated in the BVI and is not subject to income taxes under the current laws of BVI.

USCNHK and Euroasia are holding companies registered in Hong Kong and has no operating profit for tax liabilities.

The Group’s subsidiaries in the PRC are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax law (the “EIT Law”), which was effective since January 1, 2008 Tantech Bamboo was registered in the PRC and is subject to corporate income tax at a reduced rate of 15% starting from 2008 when it was approved by local government as a high-tech company. Tantech Bamboo did not renew the high-tech certificate for fiscal 2020 and subject to corporate tax rate of 25% for the year 2020. Shangchi Automobile was approved by local government as a high–tech company on December 7, 2017 and renewed on December 2, 2020, which valid for three calendar years of 2020 to 2022. Shangchi Automobile was subject to income tax rate of 15%.

The following table reconciles PRC statutory rates to the Company’s effective tax rates for the years ended December 31, 2021, 2020 and 2019:


	Years ended December 31,
	2021		2020		2019
Statutory PRC income tax rate	25	%	25	%	25	%
Favorable tax rate impact	(17)	%	(14)	%	(11)	%
Permanent difference and others	1	%	(5)	%	4	%
Changes of deferred tax assets valuation allowances	(38)	%	0	%	(22)	%
Total	(29)	%	6	%	(4)	%

Note 19 – Taxes (continued)

The income tax expense (credit) consisted of the following:


	Years ended December 31,
	2021		2020		2019
Current	$	2,429,480	$	1,188,136	$	529,162
Deferred		—		(1,799,791)		(165,500)
Total	$	2,429,480	$	(611,655)	$	363,662

Significant components of deferred tax assets and liabilities are as follows:


	December 31,		December 31,
	2021		2020
Deferred tax assets:
Allowance for doubtful accounts and other markdown and impairments	$	7,622,322	$	4,464,601
Valuation allowance		(7,622,322)		(4,464,601)
Total	$	—	$	—

Deferred tax liability:
Increase in fair value of intangible assets acquired through acquisition	$	2,129,517	$	1,905,442
Impairment of intangible assets acquired through acquisition		(2,129,517)		(1,905,442)
Total	$	—	$	—

At December 31, 2021 and 2020, the Company has provided full valuation allowance for deferred tax assets that the Company estimated the Company could not realize due to expected future operating loss in certain entities. As of December 31, 2021 and 2020, the valuation allowance was $7,622,322 and $4,464,601, respectively. The Company’s management reviews this valuation allowance periodically and makes adjustments as necessary.