Annual report pursuant to Section 13 and 15(d)

Taxes on Income

v3.21.1
Taxes on Income
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Taxes on Income

NOTE 22 - TAXES ON INCOME

 

A. Israeli taxation:

 

Taxable income of the Company is subject to the Israeli corporate tax at the rate of 23%.

 

As of December 31, 2020, the Company has carried forward losses for Israeli income tax purposes of approximately $8 million which can be offset against future taxable income for an indefinite period of time.

 

The Company has final (considered final) tax assessments through the 2014 tax year.

 

B. U.S. subsidiaries:

 

The U.S. subsidiaries are taxed under United States federal and state tax rules. Income tax is calculated based on a U.S. federal tax rate of 21%.

 

The U.S. subsidiaries estimated federal tax loss carryforward amounted to $822 as of December 31, 2020. Such losses are available to offset any future U.S. taxable income of the U.S. subsidiaries income for an indefinite period of time.

 

The U.S. subsidiaries have not received final tax assessments since incorporation.

 

C. Deferred income taxes reflect the net tax effects of net operating loss and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

 

   

As of

December 31

  
Composition of deferred tax assets:   2020     2019  
Net operating loss carry-forward   $ 2,661     $ 1,585  
Research and development credits     104       112  
Deferred revenues     177       -  
Others     75       9  
Net deferred tax asset before deferred tax liabilities and valuation allowance     3,017       1,706  
                 
Composition of deferred tax liabilities:                
Prepaids     88       -  
Depreciation costs     407       -  
Net deferred tax asset before valuation allowance     2,522       1,706  
                 
Valuation allowance     (2,522 )     (1,706 )
Net deferred tax assets   $ -     $ -  

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance as of December 31, 2020 and 2019.

 

E. For the years ended December 31, 2020 and 2019, the following table reconciles the statutory income tax rate to the effective income tax rate:

 

   

Year Ended

December 31,

  
    2020     2019  
             
Tax rate     23 %     23 %
                 
Tax expense (benefit) at statutory rate   $ (6,572 )   $ (2,054 )
Tax rate differential     45       -  
Permanent differences with respect to stock-based compensation     594       639  
Permanent differences with respect to derivative warrants liabilities, bifurcated conversion feature and convertible loans     2,738       858  
Permanent differences with respect to call option to acquire potential acquiree     731       -  
Permanent differences with respect to IPR&D acquired     1,925       -  
Change in temporary differences     (437 )      111  
Others     -       2  
Loss carryforwards     976       444  
Income tax expense (benefit)   $ -     $ -