SORL is currently only being taxed by the Chinese government at 50% of
the standard rate.  After 2008 SORL will lose this shelter,
effectively doubling their current tax rate.  (Rule in China: No tax
for first 2 years after becoming profitable, then 50% of normal tax
rate for the next 2 years, then the normal corporate tax rate after
that)

I am concerned about what effect this will have on their already slim
(and slipping) margins...  Any thoughts?  It would be interesting to
see how this higher tax rate (not starting until 2009) would have
affected this quarter's earnings...

"Under a Tax Holiday in PRC, the Company is granted an exemption from
income taxes for two years commencing from the first cumulative profit-
making year and a 50% reduction in the income tax rates for the
following three years. Fiscal year ended December 31, 2004 was the
first accumulative profit-making year. SORL is entitled to a 50%
income tax reduction in the fiscal years ended December 31, 2006, 2007
and 2008. The applicable income tax rate is 26.4% in Ruian City which
is located in the coastal economic development zones."

I don't know if this is as cut and dry as it sounds... they were
getting some tax "rebates" throughout the year... any ideas?