Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Income Tax

v3.8.0.1
Income Tax
12 Months Ended
Dec. 31, 2017
Income Tax [Abstract]  
INCOME TAX

NOTE 15 – INCOME TAX

 

The Company files its income tax report in the state of Israel and is subject to taxation laws applicable in Israel.

 

A. On January 4, 2016, the Israeli parliament passed the Law for Amendment of the Income Tax Ordinance No. 216, which, among other things reduced the standard Israeli corporate income tax rate from 26.5% to 25% effective as of January 2016.

 

In December 2016, the Israeli parliament passed the Economic Efficiency Law (Legislative Amendments to Achieve Budget Targets for the 2017 and 2018 Budget), which set a further reduction of corporate tax from 25% to 23%. The provisions of the law included a Temporary Order stipulate that the corporate tax rate in 2017 will be 24%. As a result, the corporate tax rate that will apply in 2017 will be 24% and the corporate tax rate that will take effect from 2018 onwards will be 23%

 

B. The Company has final (considered final) tax assessments through the 2012 tax year.

 

C. As of December 31, 2017, the Company has carry forward losses for Israeli income tax purposes of approximately $3.3 million which can be offset against future taxable income for an indefinite period of time.

 

D. The Company is still in its development stage and has not yet generated revenues, therefore, it is more likely than not that sufficient taxable income will not be available for the tax losses to be utilized in the future. Therefore, a valuation allowance was recorded to reduce the deferred tax assets to its recoverable amounts.

 

    As of December, 31  
Composition of deferred tax assets:   2017     2016     2015  
Net loss carry-forward   $ 814,000     $ 531,522     $ 446,684  
Valuation allowance     (814,000 )     (531,522 )     (446,684 )
      -       -       -  

 

E. For the years ended December 31, 2017 and 2016, the following table reconciles the statutory income tax rate to the effective income tax rate:

 

    Year Ended December 31,  
    2017     2016     2015  
                   
Tax rate     24 %     25 %     26.5 %
                         
Tax expense (benefit) at statutory rate   $ (642,090 )   $ (163,365 )   $ (216,913 )
Tax rate differential     28,057       (55,376 )     -  
Decrease in taxes from permanent differences in stock-based compensation     27,301       52,545       58,098  
Decrease in taxes from permanent difference in warrants liabilities     304,254       29,394       9,325  
Loss carryforwards-change in valuation allowance     282,478       136,802       149,490  
Income tax expense (benefit)   $ -     $ -     $ -