Income Taxes

9 Months Ended

Oct. 31, 2017

8. INCOME TAXES

For the nine months ended October 31, the local (United States) and foreign components of income/(loss) before income taxes were comprised of the following:

	Nine months ended October 31, 2017		Nine months ended October 31, 2016

Tax jurisdictions from:
- Local	$	16,824	$	-
- Foreign, representing
Seychelles		-		-
Hong Kong		105,591		-
Loss before income tax	$	122,415	$	-

The provision for income taxes consisted of the following:

		Nine months ended October 31, 2017		Nine months ended October 31, 2016
Current:
- Local	$	-	$	-
- Foreign		-		-
Deferred:
- Local		-		-
- Foreign		-		-

Income tax expense	$	-	$	-

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, Seychelles and Hong Kong that are subject to taxes in the jurisdictions in which they operate, as follows:

United States of America

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of October 31, 2017, the operations in the United States of America incurred $25,637 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2037, if unutilized. The Company has provided for a full valuation allowance of $8,973 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

Seychelles

Under the current laws of the Seychelles, AFC ANS Baby Holdings Limited is registered as an international business company which governs by the International Business Companies Act of Seychelles. A company is subject to Seychelles income tax if it does business in Seychelles. A company that incorporated in Seychelles, but does not do business in Seychelles, is not subject to income tax there. AFC ANS Baby Holdings Limited did not do business in Seychelles from inception to October 31, 2017, and it does not intend to do business in Seychelles in the future.

Hong Kong

Australian Formulated Limited is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income. For the nine months ended October 31, 2017, Australian Formulated Limited suffered from an operating loss of $105,591 for income tax purposes which can be carried forward to offset future taxable income at no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $21 ,262 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of October 31, 2017 and January 31, 2017:

	As of October 31, 2017			As of January 31, 2017
	(unaudited)			(audited)
Deferred tax assets:
Net operating loss carryforwards
-United States of America	$	8,973		$	3,085
-Hong Kong		21,262			3,840
		30,235			6,925
Less: valuation allowance		(30,235	)		(6,925	)
Deferred tax assets		-			-

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $30,235 as of October 31, 2017. During the nine months ended October 31, 2017, the valuation allowance increased by $23,310, primarily relating to net operating loss carryforwards from the various tax regime.

Australian Formulated Corp 10-Q