Note 16 – Taxes on income
| A. | Corporate tax rate |
Presented hereunder are the tax rates relevant to the Company in the years 2015-2017:
2015 – 26.5%, and
2016 – 25%
2017 – 24%
On January 4, 2016 the Knesset plenum passed the Law for the Amendment of the Income Tax Ordinance (Amendment 216) - 2016, by which, inter alia, the corporate tax rate would be reduced by 1.5% to a rate of 25% as from January 1, 2016.
Furthermore, on December 22, 2016 the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016, by which, inter alia, the corporate tax rate would be reduced from 25% to 23% in two steps. The first step will be to a rate of 24% as of January 2017 and the second step will be to a rate of 23% as of January 2018.
These changes had no impact on the financial statements.
| B. | Theoretical tax |
The following presents the adjustment between the theoretical tax amount and the tax amount included in the financial statements:
| For the year ended December 31, | |||||||||||||
| 2015 | 2016 | 2017 | |||||||||||
| Thousand NIS | Thousand NIS | Thousand NIS | |||||||||||
| Loss before taxes on income | (20,992 | ) | (34,470 | ) | (63,005 | ) | |||||||
| Statutory tax rate | 26.5 | % | 25 | % | 24 | % | |||||||
| Theoretical tax benefit | (5,563 | ) | (8,618 | ) | (15,121 | ) | |||||||
| Increase in tax liability due to: | |||||||||||||
| Unrecognized expenses | 1,598 | 2,449 | 2,264 | ||||||||||
| Losses and benefits for tax purposes for which no deferred taxes were recorded | 3,965 | 6,169 | 12,857 | ||||||||||
| Taxes on income | - | - | - | ||||||||||
| C. | Tax assessments |
The Company has final tax assessments until and including the 2012 tax year.
| D. | Accumulated losses for tax purposes and other deductible temporary differences |
As of the reporting date, the Group has net operating loss for tax purposes in the amount of approximately NIS 107,000,000. The Israeli tax authorities may not permit the off-set of the accumulated losses that were incurred before the merger of the Company (see Note 12.B).
As of December 31, 2017, the Group has deductible temporary differences in the amount of approximately NIS 8,070,000, mainly relating to R&D expenses which are deductible over a period of three years for tax purpose.
The Group has not recognized a tax asset for the aforesaid losses and deductible temporary differences, due to the uncertainty regarding the ability to utilize those losses in the future.