| 15. | INCOME TAX (INCOME)/ EXPENSE |
| Year ended December 31, | |||||||||||||
| 2017 | 2016 | 2015 | |||||||||||
| PRC enterprises income tax: | |||||||||||||
| Current tax | - | 53,790 | 1,514,577 | ||||||||||
| Deferred tax | (4,598,061 | ) | (3,779,923 | ) | (908,888 | ) | |||||||
| - | (3,726,133 | ) | 605,689 | ||||||||||
Hongri Fujian and Anhui Kai Xin subject to the applicable enterprise income tax rate of 25%. As of December 31, 2017, 2016, and 2015, the Company had no unrecognized tax benefits.
France Cock and Vast Billion were incorporated in Hong Kong and subject to Hong Kong profits tax at a tax rate of 16.5%. No provision for Hong Kong profits tax has been made as France Cock and Vast Billion has no taxable income during the reporting period.
Hongri International Holding Limited and Roller Rome were incorporated in the BVI and, under the current laws of the BVI, are not subject to income taxes.
KBS Fashion Group Limited was incorporated in the Marshall Island, and, under the current laws of the Marshall Island, is not subject to income taxes.
The tax charge for the year can be reconciled to the profit per the consolidated statements of comprehensive income as follows:
| Year ended December 31, | |||||||||||||
| 2017 | 2016 | 2015 | |||||||||||
| (Loss)/profit before tax | (19,413,657 | ) | (15,628,820 | ) | 1,849,359 | ||||||||
| Tax calculated at domestic tax rates applicable to profits in PRC (2017, 2016, and 2017: 25%) | (4,853,414 | ) | (3,907,205 | ) | 462,340 | ||||||||
| Tax effect of expenses not deductible for tax purpose | - | - | 908,974 | ||||||||||
| Tax effect of tax loss of tax exempt entities | 255,354 | 181,072 | (765,625 | ) | |||||||||
| Tax charge for the year | (4,598,061 | ) | (3,726,133 | ) | 605,689 | ||||||||
The following is the analysis of the deferred tax balances for financial reporting purposes:
| 2017 | 2016 | 2015 | |||||||||||||||||||||||
| Temporary difference | Deferred tax assets | Temporary difference | Deferred tax assets | Temporary difference | Deferred tax assets | ||||||||||||||||||||
| Beginning of the year | 20,737,366 | 4,879,652 | 5,617,674 | 1,340,268 | 1,981,777 | 495,444 | |||||||||||||||||||
| Bad Debt provisions charged to profit or loss | - | - | 331,196 | 82,799 | 1,070,563 | 267,641 | |||||||||||||||||||
| Impairment charged to profit or loss | 101,256 | 25,314 | 11,649,038 | 2,912,259 | 2,565,334 | 641,333 | |||||||||||||||||||
| Tax loss carried forward | 17,922,508 | 4,480,627 | 3,139,458 | 784,865 | |||||||||||||||||||||
| Effect of translation | - | 539,351 | - | (240,539 | ) | - | (64,150 | ) | |||||||||||||||||
| End of the year | 38,761,130 | 9,924,944 | 20,737,366 | 4,879,652 | 5,617,674 | 1,340,268 | |||||||||||||||||||