Letter To Shareholders - Mitac

21) Income tax
A. Income tax expense and payable are reconciled as follows:
2009 2008
Income tax at statutory tax rate $ 174,110 $ 242,735
Tax effect of permanent differences ( 962,155 ) ( 212,258 )
10% tax on unappropriated earnings 5,408 196,446
Tax effect of investment tax credits ( 268,196 ) ( 172,224 )
Loss carryforwards ( 340,819 ) -
Overdue tax assessed and approved by the Tax
Authority 197,735 560,947
Tax effect of amendments to the tax laws 13,963 ( 275,277 )
Adjustment of prior year’s income tax expense 78,192 -
Valuation allowance on deferred income tax assets and
liabilities 1,412,640 ( 3,406 )
Tax which is subjected to separate withholding
income tax - 487
Income tax expense 310,878 337,450
Net effect of deferred income tax liabilities 2,580 162,199
Adjustment of prior year’s income tax expense ( 13,964 ) 275,277
Overdue tax assessed and approved by the Tax
Authority 1,065,914 479,292
Prepaid income tax ( 229 ) ( 98,307 )
Income tax paid by subsidiary ( 15,457 ) ( 97,454 )
Tax which is subjected to separate withholding
income tax - ( 487 )
Translation adjustment ( 34 ) 7,944
Income tax payable $ 1,349,688 $ 1,065,914
B. Deferred income tax assets and liabilities:
December 31,
2009 2008
Deferred income tax assets – current $ 522,071 $ 918,791
Valuation allowance ( 10,597 ) ( 10,218 )
$ 511,474 $ 908,573
Deferred income tax assets – non-current $ 2,548,817 $ 647,132
Deferred income tax liabilities – non-current ( 422,170 ) ( 527,714 )
Valuation allowance ( 2,014,087 ) ( 406,536 )
$ 112,560 ( $ 287,118 )
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