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| <NonNumbericText> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>NOTE 17 – TAX</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>(a) Corporation Income Tax (“CIT”)</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On March 16, 2007, the National People’s Congress of the PRC adopted a new corporate income tax law (the “new CIT law”) in its fifth plenary session. The new corporate income tax law took effect on January 1, 2008. In accordance with the relevant tax laws and regulations of the PRC, the applicable corporate income tax (“CIT”) rate of Kandi is 25%. However, likewise to fiscal year ended 2012, in fiscal year 2013, the Company, as a result of qualifying as a high technology company in China, is both entitled to pay a reduced income tax rate of 15% and entitled to a research and development tax credit of 25% of 50% actual spending, with effective rate of 36.5% and 34.6% savings, resulting in a total tax benefit of 51.5% and 60.7% . </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Kandi New Energy is a subsidiary of the Company and its applicable corporate income tax rate is 25%. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Yongkang Scrou Electric. Co., Ltd is a subsidiary of the Company and its applicable corporate income tax rate is 25% </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Kandi Electric Vehicles (Changxing) Co., Ltd. is a subsidiary of the Company and its applicable corporate income tax rate is 25%. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Kandi Electric Vehicles (Wanning) Co., Ltd. is a subsidiary of the Company and its applicable corporate income tax rate is 25%. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Zhejiang Kandi Electric Vehicles Co., Ltd is a joint venture company, a 50% owned subsidiary of the Company and its applicable corporate income tax is 25%. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">According to the PRC CIT reporting system, the CIT sales cut-off base is concurrent with the value added tax (“VAT”) which will be reported to the State Administration of Taxation (“SAT”) on a quarterly basis. Since the VAT and CIT are accounted for on a VAT tax basis that recorded all sales on a “State provided official invoices” reporting system, the Company is reporting the CIT according to the SAT prescribed tax reporting rules. Under the VAT tax reporting system, sales cut-off did not take the accrual basis but rather on a VAT taxable reporting basis. Therefore, when the company adopted US GAAP on accrual basis, the sales cut-off CIT timing difference which is derived from the VAT reporting system and will create a temporary sales cut-off timing difference; this difference is reflected in the deferred tax assets or liabilities calculations on the income tax estimate reported in the Form 10-K..</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Effective January 1, 2007, the Company adopted ASC 740, Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of June 30, 2013, the Company does not have a liability for unrecognized tax benefits. The Company files income tax returns to the Internal Revenue Services (“IRS”) and states where the Company has operation. The Company is subject to U.S. federal or state income tax examinations by IRS and relevant state tax authorities for years after 2006. During the periods open to examination, the Company has net operating loss carry forwards (“NOLs”) for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in China. As of June 30, 2013 the Company was not aware of any pending income tax examinations by China tax authorities. The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. [As of June 30, 2013, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S federal income tax for the reporting period ended June 30, 2013 due to the net operating loss position and having net operating loss carry forward in the United States.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Income tax expense (benefit) for the six months ended June 30, 2013 and 2012 is summarized as follows:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>For the Six Months Ended</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>June 30,</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>(Unaudited)</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2013</b> </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2012</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Current:</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Provision for CIT</td> <td align="left" valign="bottom" width="1%">$</td> <td align="right" valign="bottom" width="12%"> 244,901 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%">$</td> <td align="right" valign="bottom" width="12%"> 661,120 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Provision for Federal Income Tax</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Deferred:</td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> - </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Provision for CIT</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Income tax expense (benefit)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 244,901 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 661,120 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company’s income tax expense (benefit) differs from the “expected” tax expense for the six months ended June 30, 2013 and 2012 (computed by applying the U.S. Federal Income Tax rate of 34% and PRC Corporation Income Tax rate of 25%, respectively to income before income taxes) as follows: </p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>For the Six Months Ended</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>June 30,</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>(Unaudited)</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2013</b> </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2012</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Computed "expected" expense</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 270,920 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 608,465 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Favorable tax rate</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> (294,960 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> (600,060 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Permanent differences</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 31,346 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 650,463 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Valuation allowance</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 237,595 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 2,252 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Income tax expense (benefit)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%"> 244,901 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%"> 661,120 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of June 30, 2013 and December 31, 2012 are summarized as follows:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" nowrap="nowrap" width="12%"> <b>June 30, 2013</b> </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" width="1%"> </td> <td align="center" nowrap="nowrap" width="12%"> <b>December 31,</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>(Unaudited)</b> </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2012</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Current portion:</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Deferred tax assets (liabilities):</td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Expense</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (10,288 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (193,777 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td align="left">Subtotal</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (10,288 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (193,777 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Deferred tax assets (liabilities):</td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Sales cut-off (CIT tax reporting on VAT tax system)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 10,190 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 138,611 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> Other</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 3,917 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> - </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Subtotal</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 14,107 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 138,611 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr> <td> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total deferred tax assets (liabilities) – current portion</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 3,819 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (55,166 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr> <td> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Non-current portion:</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Deferred tax assets:</td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Depreciation</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 210,735 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 223,409 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> Loss carried forward</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 237,595 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 1,172,097 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Valuation allowance</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (237,595 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (1,172,097 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td align="left">Subtotal</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 210,735 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 223,409 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Deferred tax liabilities:</td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="12%"> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Accumulated other comprehensive gain</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (596,132 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (222,714 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td align="left">Subtotal</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (596,132 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (222,714 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Total deferred tax assets – non-current portion</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> (385,397 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 695 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Net deferred tax assets (liabilities)</td> <td align="left" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%"> (381,578 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%"> (54,471 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>(b) Tax Benefit (Holiday) Effect</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> For the six months ended June 30, 2013 and 2012 the PRC corporate income tax rate was 25%. Certain subsidiaries of the Company are entitled to tax benefit (holidays) for the six months ended June 30, 2013 and 2012. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The combined effects of the income tax expense exemptions and reductions available to the Company for the six months ended June 30, 2013 and 2012 are as follows:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>For the Six Months Ended</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>June 30</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" width="27%"> <b>(Unaudited)</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2013</b> </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>2012</b> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Tax benefit (holiday) credit</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 294,960 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 600,060 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Basic net income per share effect</td> <td align="left" valign="bottom" width="1%">$</td> <td align="right" valign="bottom" width="12%"> 0.01 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%">$</td> <td align="right" valign="bottom" width="12%"> 0.02 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> </table> </NonNumbericText> |
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