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EXCEL - IDEA: XBRL DOCUMENT - SGB International Holdings Inc.Financial_Report.xls
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EX-31.1 - CERTIFICATION OF THE CEO - SGB International Holdings Inc.exhibit31-1.htm
EX-32.1 - CERTIFICATION OF THE CEO - SGB International Holdings Inc.exhibit32-1.htm
EX-31.2 - CERTIFICATION OF THE CFO - SGB International Holdings Inc.exhibit31-2.htm
10-K - ANNUAL REPORT - SGB International Holdings Inc.form10k.htm
EX-32.2 - CERTIFICATION OF THE CFO - SGB International Holdings Inc.exhibit32-2.htm
v2.4.0.6
INCOME TAX
12 Months Ended
Dec. 31, 2011
INCOME TAX [Text Block]
15

INCOME TAX

SGB, Dragon International and Fujian Huilong are subject to income tax laws in their respective tax jurisdictions, which are the same as their respective place of incorporation.

The Company is subject to Canadian income tax laws at 26.5% tax rate and Dragon International is subject to Hong Kong tax law at 16.5% tax rate. Fujian Huilong is subject to the local tax law in Yongding Town, Fujian Province, PRC, the income tax of coal industry is calculated by weight of exploitation, claiming $0.9 (RMB 5.5) per ton since March 31, 2008. This tax rate difference is adjusted under Rate differences in other jurisdictions.

Income tax expenses consist of the following:

    2011     2010  
          (Restated)  
     $      
Current income tax expense   114,901     127,822  
Deferred income tax expense   -     -  
Total   114,901     127,822  

A reconciliation of the income tax expense is as follows:

    2011     2010  
          (Restated)  
     $      
Net income before income taxes   1,809,376     3,550,644  
Expected income tax expense   497,662     127,822  
             
Adjustments resulting from:            
Non-deductible items   -     -  
Rate differences in other jurisdictions   (475,421 )   -  
Changes in enacted rates   (3,989 )   -  
Other   7,978     -  
Change in valuation allowance   113,671     -  
    114,901     127,822  

Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets (liabilities) are as follows:

    2011     2010  
          (Restated)  
         
Deferred income tax assets (liabilities):            
Operating tax losses carried forward   113,671     -  
Valuation Allowance   (113,671 )   -  
             
    -     -  

As at December 31, 2011, the Company had available for deduction against future taxable income in Canada non-capital losses of approximately $265,944. These losses, if unutilized, have expiration year until 2031.

The Company conducts its business in China, which currently has a number of laws related to various taxes imposed by both federal and regional governmental authorities. Applicable taxes include value added tax, corporate income tax (profits tax), and payroll (social) taxes, together with others. Laws related to these taxes have not been in force for a significant period or could be implemented differently under different regional government (ie., provision of tax incentives or exemption from regional government to promote regional business development), in contrast to more developed market economies; therefore, implementing regulations are often unclear or nonexistent. Often, differing opinions regarding legal interpretation exist both among and within government ministries and organizations; thus, creating uncertainties and areas of conflict.

Tax declarations, together with other legal compliance areas (as examples, customs and currency control matters) are subject to review and investigation by a number of authorities, who are enabled by law to impose extremely severe fines, penalties and interest charges. These facts create tax risks in China substantially more significant than typically found in countries with more developed tax systems.

The risk remains that the relevant authorities could take differing positions with regard to interpretive issues and the effect could be significant. The fact that a year has been reviewed does not close that year, or any tax declaration applicable to that year, from further review.

During the years ended December 31, 2011 and 2010 and to the current date, the Company had not received any tax re-assessment from the federal and regional governmental authorities.