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 Tracking 1258 U.S. listed China Stocks and Counting...
 Tracking 3138 U.S. Stocks and Counting...
Created: 01-Jan-2008

Keying in on fundamental differences between the SEC & SAIC

  • Yesterday, 9:30 AMmore... 
    Wuxi Pharmatech ( (NYSE:WX) congratulated its business partner TaiMed Biologics for receiving the Orphan Drug Designation from FDA for ibalizumab, a humanized monoclonal antibody for the treatment of HIV/AIDS infection. 
  • Yesterday, 9:30 AM 
    Lakeland Industri (NASDAQ:LAKE) announced a private placement of $11.2 million at a price of $10.00 per share.
  • Yesterday, 9:30 AMmore... 
    GeoBargain on the radar Igi Laboratories (NYSE AMEX:IG) reported strong Q3 2014 results: Total revenues of $6.7 million in the third quarter of 2014, an increase of 67% over the same quarter in 2013 and ahead of analyst estimates of $6.4 million; Q3 2014 EPS of $0.00 vs $0.00 in the prior year and ahead of analyst estimates of a loss of $0.01. Full year 2014 revenue guidance implies Q4 revenues will be ahead of analyst estimates of $9.4 million. 
     
  • Thursday, October 23, 2014, 09:30 AMmore... 
    Vimicro Internati (NASDAQ:VIMC) announced $29.2 million contract win in Chenzhou City of Hunan Province to provide video surveillance cameras and systems to the Municipal Government. 
     
  • Wednesday, October 22, 2014, 10:16 AMmore... 
    See our follow-up Seeking Alpha short thesis on China Green Agric (NYSE:CGA): "China Green Agriculture Chairman's Fulmination, Accusations Of Terrorism, And Another 'Sell' Rating".   
  • Wednesday, October 22, 2014, 09:30 AMmore... 
    China Mobile Game (NASDAQ:CMGE) announced that it is granted the right by Sanrio to develop mobile games based on 12 famous characters including HELLO KITTY
  • Wednesday, October 22, 2014, 09:30 AMmore... 
    Himax Technologie (NASDAQ:HIMX) announced that Google Inc. (GOOG) decided not to exercise its previously announced option to make an additional investment in HIMX's subsidiary, Himax Display Inc. ("HDI"). 
  • Wednesday, October 22, 2014, 09:30 AMmore... 
    China Auto Logist (NASDAQ:CALI) received NASDAQ notification that it is no longer in compliance with market value requirement, the company has 180 days to regain compliance.
     
  • Wednesday, October 22, 2014, 09:30 AMmore... 
    Wuxi Pharmatech ( (NYSE:WX) announced that it has entered strategic collaboration with Foundation Medicine to offer best-in-class comprehensive genomic profiling in China.
  • Wednesday, October 22, 2014, 09:30 AMmore... 
    GeoSpecial Super Micro Compu (NASDAQ:SMCI) reported strong Q1 2015 results: Q1 2015 sales of $443.3 million vs $309.0 in the prior year and ahead of analyst estimates of $417.5 million; Q1 2015 non-GAAP EPS of $0.46 vs $0.22 in the prior year and ahead of analyst estimates of $0.38.
     
  • Wednesday, October 22, 2014, 09:30 AMmore... 
    GeoBargain Mastech Holdings (NYSE AMEX:MHH) reported Q3 2014 results: Q3 2014 sales of $28.6 million vs $28.2 million in the prior year; Q3 2014 EPS of $0.20 vs $0.23 in the prior year. 
     
  • Tuesday, October 21, 2014, 09:34 AMmore... 
    Staffing 360 (OTC BB:STAF) - We will begin tracking STAF due to strong Q1 2015 results.  Net sales increased to $33.4 million vs $1.3 million in the prior year period. The company is still losing money but is growing revenues at a rapid pace due to recent acquisition and has plans to uplist to Nasdaq. We will continue to track the progress of the company to see if achieving profitability is possible in the near term horizon.
  • Tuesday, October 21, 2014, 09:32 AMmore... 
    Ctrip.com Interna (NASDAQ:CTRP) and Priceline.com (PCLN) entered an agreement this August that PCLN will invest $500 million convertible bond which is convertible into 6.1 million common shares (ADS).  PCLN is also granted permission by CTRP that, combined with convertible bonds, PCLN can hold up to  a 10% stake in CTRP.  According to a 13D/A filed on 10/21/2014, PCLN has been continuously conducting open market purchase of the stock and is now owns a 7.90% stake in CTRP.
  • Tuesday, October 21, 2014, 09:30 AM 
    Voxx Internationa (NASDAQ:VOXX) - Board of Directors reaffirms authorization of stock buyback program
  • Monday, October 20, 2014, 09:30 AMmore... 
    Hollysys Automati (NASDAQ:HOLI) announced new contract valued at $13.8 million to supply the supervisory control and data acquisition system (SCADA) to Tianjin Subway Line.
  • Monday, October 20, 2014, 09:30 AM 
    Sinocoking Coal A (NASDAQ:SCOK) announced that operations have commenced on Syngas facility. 
  • Monday, October 20, 2014, 09:30 AMmore... 
    Sutor Technology (NASDAQ:SUTR) announced the company received non-compliance notice due to the Company's failure to timely file its Annual Report on Form 10-K for the fiscal year ended on June 30, 2014.
  • Friday, October 17, 2014, 09:30 AM 
    Kongzhong Corpora (NASDAQ:KZ) announced special cash dividend of $0.88 per ADS. 
  • Friday, October 17, 2014, 09:30 AMmore... 
    China Biologic Pr (NASDAQ:CBPO) announced that the Company has received approval from CFDA (China Food and Drug Administration) for commercial manufacturing of human PCC (prothrombin complex concentrate) at its Shandong Taibang facility. 
  • Friday, October 17, 2014, 09:30 AMmore... 
    GeoBargain Firstime Design L (PINK:FTDL) reported Q3 2014 results. The company has had a hard time sustaining sales and earnings growth since we coded it a GeoBargain on 2/13/2014 at $4.00. The company is embarking on a new online strategy to accelerate growth and broaden its customer base.  We will give management more time to execute its strategy. 
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Zon4Ever 25-Aug-2010 10:07 AM
Post Type: Public Public
Annual Inspection and Income Tax Filing Process in China - Opinion Letter (#3587) 25-Aug-2010 10:07 AM
As part the due diligence process of understanding quality issues in the China Hybrid space, the GeoTeam retained the independent services of an attorney familiar with PRC law.  We asked him to contact different agencies in China, including the SAIC as well as other attorneys before writing the following letter to us.

Re: Annual Inspection and Annual Income Tax Filing Process in China

In China, there is an annual inspection done by the Statement Administration for Industry and Commerce (“SAIC”) for every registered company.  For the companies owned by Chinese individuals and/or entities (Variable Interest Equity ownership structures), except listed companies and/or some special companies, the companies need to file their financial reports to AIC for accomplishing the annual inspection and the audit of the financial statement is not required.  

For the annual income tax filing in the taxation bureau, which is in the beginning of the next financial year, if a company owned by Chinese individuals and/or entities has a big loss (negative net income) in the last financial year and/or claim the rights to make up for losses in the next several financial years, the financial statement with a big loss (negative net income) shall be audited for the purpose of taxation by an independent CPA firm.  If a company only has a small loss (usually the line between big loss and small loss shall be RMB 100,000 and/or RMB 50,000 and the number of the line depends on the different requirements of different taxation bureaus) and does not claim the rights to make up for losses in the next several financial years, the financial statement is not required to be audited.  Accordingly, this company does not pay any income tax.  If a company owned by Chinese individual and/or entities has a positive net income, the company shall pay the income tax based on the standard income tax rate, which is twenty-five percent (25%) of the net income in the last financial year.  Such a financial statement with a positive net income is not required to be audited.

For the foreign invested companies, including Sino-foreign joint venture enterprises and wholly foreign owned enterprises, the annual financial report submitted to the AIC is required to be audited by an independent CPA firmThe same report will also be filed to the taxation bureau and several other government authorizations, such as State Administration for Foreign Exchange, for the issues of foreign exchange administration and others.  If a company has a negative income in the audited financial report, the company does not pay income tax and the company may claim the rights to make up for losses in the next several financial years.  If the companies have positive net incomes, the companies shall pay income tax based on the standard income tax rate, which is 25% of the net income in the last financial year.  

In the real life, for the purpose of avoiding income tax, some companies in China claim that there is a loss (negative net income) in the last financial year.  For the companies owned by Chinese individuals and/or entities, they may claim a small loss (for example, a loss lower than RMB 50,000 and/or RMB 100,000) but not claim to make up for losses in the next several financial years. Therefore, the financial report in the last financial year is not required to be audited by an independent CPA firms.  For the foreign invested enterprises, they may purchase a forged audited financial report which states a loss from a small CPA firm to avoid the possible income tax.

Chinese government controls the possible taxation fraud through the taxation inspection which conducts by the taxation bureau.  For conducting the taxation inspection, the taxation bureau may inspect and review the financial statement and materials of the companies in details from time to time.  However, as the taxation bureau only has limited number of officers and resources.  It is impossible for the taxation bureau to inspect the financial statements and materials of all companies in each financial year.  At the same time, the AIC does not review the financial statements and materials of a company, except in some administrative investigation process.  

If a company with a forged financial report (whether it is audited or not) is chosen for taxation inspection and the fraud is found out by the taxation bureau, this company may be fined and be required to make up the tax which the company shall pay.  The responsible people within the company may also bear the criminal and/or administrative liability. However, to one specific company, as the chance for the taxation inspection is very low, the fine is also comparatively low and criminal liability is not always applied in the real life, some companies dare to take this risk to make a forged financial report for avoiding the income tax.  At the same time, there are also seldom cases that CPA firms which provided forged audit reports are fined and/or bear criminal and/or administrative liability in these situations.
 
In practice, for the taxation purpose, each company has a specific taxation officer which is the taxation officer to cover the district which the company lies in.  The officer in the company usually an accountant, directly deals with the taxation officer to file the taxation monthly through on line system and/or personally.  At the beginning of the next financial year, the annual income tax filing of the last financial year will also be reported to the same taxation officer.  After each monthly (annually for the income tax) payment of tax (VAT, business tax, personal income tax and company income tax, etc.), the taxation officer will issue a taxation certificate to the accountant to state the amount and types of tax paid on behalf of the taxation bureau.  This taxation information (including the amount of the tax) is not open to any third party except the court, prosecutor and/or police for the reasons of litigation and/or criminal/administrative investigation.  

NOTE: This opinion letter is wholly based on the current effective laws and regulations of P.R. China, and the real annual inspection and income tax filing practice in China.  In different cities and/or provinces of P.R. China, the practice of annual inspection and income tax filing might be slightly different from this opinion letter.  Furthermore, this opinion letter is only for Geoinvesting LLC to understand the process of annual inspection and income tax filing in P.R. China.  This opinion letter shall not be regarded as a formal legal opinion letter based on the laws and regulations of P.R. China.


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