Country Style Cooking Restaurant Chain Reports a Notice of Change in Preferential Tax Treatment and Announces Second Quarter 2011 Revenue Estimate
Country Style Cooking Restaurant Chain Co., Ltd (NYSE: CCSC) today reported a change in the preferential tax treatment it previously received from the State Tax Bureau in Chongqing, China for the three years 2008, 2009 and 2010 and the impact of this change on the Company's results of operations for the current period. In addition, the Company announced its revenue estimate for the second quarter of 2011.
The Company's subsidiary in Chongqing, China applied a preferential enterprise income tax rate of 15% from 2008 through 2010 pursuant to a written approval it received from the State Tax Bureau in Chongqing in February 2009. On June 15, 2011, the Company received notice that the PRC National Audit Office recently issued a letter to the State Tax Bureau in Chongqing stating that a few restaurant companies, including the Company's Chongqing subsidiary, should not have been granted the Preferential Tax Treatment for 2009. The National Audit Office's ruling is that the Company's Chongqing subsidiary should pay enterprise income tax at the standard rate of 25%, meaning that the subsidiary owes approximately RMB6.4 million (US$1.0 million) in additional enterprise income tax for 2009. The Company intends to pay this amount in a timely manner as requested by the local tax authority.
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