v2.4.0.6

Income Tax Expenses (Tables)

12 Months Ended

Dec. 31, 2011

Income Before Income Tax Expenses

The Company had minimal operations in jurisdictions other than the PRC. Income before income tax expenses consists of:

		For the year ended December 31,
		2009				2010				2011
		(RMB)				(RMB)				(RMB)				(US$)
PRC			936,154,635				881,077,042				1,229,776,487				195,391,805
Non-PRC			7,924,628				16,518,504				37,215,603				5,912,964
Total			944,079,263				897,595,546				1,266,992,090				201,304,769

Income Tax Expenses

Income tax expenses consist of:

		For the year ended December 31
		2009				2010				2011
		(RMB)				(RMB)				(RMB)				(US$)
Current income taxes			83,328,105				121,303,259				268,076,187				42,593,017
Deferred income tax (benefits)/expenses			1,731,905				(31,980,857	)			84,302,034				13,394,244
Taxation for the year			85,060,010				89,322,402				352,378,221				55,987,261

Reconciliation of Differences Between Statutory Tax Rate and Effective Tax Rate for CIT

A reconciliation of the differences between the statutory tax rate and the effective tax rate for CIT is as follows:

		For the year ended December 31
		2009				2010				2011
		(RMB)				(RMB)				(RMB)				(US$)
Expected taxation at PRC CIT statutory rate of 25%			236,019,816				224,398,887				316,748,023				50,326,193
Favorable tax rate			(49,059,531	)			(25,488,282	)			(130,226,808	)			(20,690,956	)
Tax holiday			(71,351,432	)			(105,110,278	)			(12,694,680	)			(2,016,982	)
Non-deductible expenses (non-taxable income), net			(4,718,414	)			7,679,477				3,904,248				620,323
Additional 50% tax deduction for qualified research and development expenses			(10,380,859	)			(15,257,615	)			(18,935,961	)			(3,008,621	)
Tax exempted VAT refund			(12,779,323	)			—				—				—
Change in valuation allowance			—				—				2,885,413				458,446
Deferred tax benefits on future tax rate difference			(2,670,247	)			(3,659,750	)			(58,833,362	)			(9,347,680	)
One-time withholding tax accrual for dividend			—				—				259,415,894				41,217,035
Provision-to-return adjustment			—				6,759,963				(9,884,546	)			(1,570,497	)
Taxation for the year			85,060,010				89,322,402				352,378,221				55,987,261

Benefit of Tax Holiday Per Basic and Diluted Earnings Per Share

The benefit of tax holiday per basic and diluted earnings per share is as follows:

		For the year ended December 31
		2009				2010				2011
		(RMB)				(RMB)				(RMB)				(US$)
Basic			0.32				0.46				0.05				0.01
Diluted			0.30				0.45				0.05				0.01

Tax Effects of Temporary Differences that Give Rise to Deferred Tax

The tax effects of temporary differences that give rise to deferred tax at December 31, 2010 and 2011 are as follows:

		December 31,
		2010				2011
		(RMB)				(RMB)				(US$)
Current deferred tax assets
Deferred revenue and advance from distributors			77,208,660				151,140,044				24,013,734
Accrued expenses			12,142,057				18,344,188				2,914,598
Allowance for doubtful debt			1,127,960				611,274				97,122
Share-based compensation expense			8,117,107				5,036,662				800,245
Tax loss			7,149,387				7,532,367				1,196,773
Less: valuation allowance			—				(2,885,413	)			(458,446	)
Net current deferred tax assets			105,745,171				179,779,122				28,564,026
Non-current deferred tax assets
Intangible assets amortization			11,069,031				11,357,297				1,804,492
Share-based compensation expense			2,076,457				2,826,219				449,041
Deferred revenue			—				2,916,666				463,412
Net non-current deferred tax assets			13,145,488				17,100,182				2,716,945
		December 31,
		2010				2011
		(RMB)				(RMB)				(US$)
Current deferred tax liabilities
Intangible assets amortization			624,770				—				—
Deferred revenue			—				2,408,961				382,746
Withholding tax			—				145,810,671				23,166,982
Net current deferred tax liabilities			624,770				148,219,632				23,549,728
Non-current deferred tax liabilities
Intangible assets amortization			186,496				298,980				47,503
Upfront fee amortization			—				14,583,333				2,317,058
Net non-current deferred tax liabilities			186,496				14,882,313				2,364,561

Activity Related to Group's Unrecognized Tax Benefits

The following table summarizes the activity related to the Group’s unrecognized tax benefits from January 1, 2010 to December 31, 2011:

		RMB
Balance as of January 1, 2010			9,955,138
Increases related to current year tax positions			4,803,660
Balance as of December 31, 2010 and January 1, 2011			14,758,798
Increases related to current year tax positions			29,692,724
Balance as of December 31, 2011			44,451,522
Balance as of December 31, 2011 (US$)			7,062,636

X

- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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