	US dollars
	Year ended December 31,
(in thousands)	2016			2015			2014
Income taxes (tax benefit):
Current taxes:
In Israel		5,581			6,279			7,564
Outside Israel		10,303			6,089			7,630
		15,884			12,368			15,194
Deferred taxes:
In Israel		91			(121	)		(471	)
Outside Israel		(1,179	)		206			(432	)
		(1,088	)		85			(903	)
Taxes in respect of prior years:
In Israel		81			369			-
Outside Israel		-			-			(45	)
		81			369			(45	)
		14,877			12,822			14,246

Until December 31, 2007, the Company and its Israeli subsidiaries reported income for tax purposes in accordance with the provisions of the Inflationary Adjustments Law, whereby taxable income was measured in NIS, adjusted for changes in the Israeli Consumer Price Index where results of operations for tax purposes were measured in terms of earnings in NIS after adjustments for changes in the Israeli Consumer Price Index ("CPI"). Commencing January 1, 2008, this law became void and in its place there are transition provisions, whereby the results of operations for tax purposes are measured on a nominal basis.

On August 5, 2013 the Israeli Parliament amended the Investments Law, by which, inter alia, it canceled the scheduled progressive reduction in the corporate tax rate for Preferred Enterprises and set it at 9% for enterprises located in zone A and 16% for enterprises located elsewhere, as of January 1, 2014.

The reduced tax rates will no longer be contingent upon making a minimum qualifying investment in productive assets.

On December 22, 2016, the Israeli parliament passed the Law for Economic Efficiency (Legislative Amendments for Achieving Budget Objectives in the Budget Years 2017 and 2018) – 2016 (hereinafter – the “Economic Efficiency Law”) and on December 29, 2016, the Law was publicized in the Official Gazette. The Economic Efficiency Law, among other things, reduced the tax rate applicable to a preferred enterprise located in Development Zone A from 9% to 7.5% (the tax rate applicable to a preferred enterprise not located in Development Zone A remained unchanged at 16%). The Economic Efficiency Law also outlined new benefit tracks for preferred technology enterprises.

On December 6, 2011, the Law for the Change in the Tax Burden (Legislative Amendments) – 2011 was published. As part of this law, among other things, commencing from 2012 the Israeli corporate income tax rate was increased to 25%. In addition, commencing in 2012, the tax rate on capital gains in real terms and the tax rate applicable to betterment in real terms were increased to 25%.

On July 30, 2013, the Israeli parliament approved the Law for the Change in National Priorities (Legislative Amendments to Achieve Budgetary Goals for 2013 and 2014) – 2013 (hereinafter – the “Law for the Change in National Priorities”), which, among other things increased the standard corporate income tax rate from 25% to 26.5% effective as of January 1, 2014.

On January 4, 2016, the plenary Knesset passed the Law for Amendment of the Income Tax Ordinance No. 216 which provides, inter alia, for a reduction of the corporate tax rate commencing from 2016 and thereafter by the rate of 1.5% such that the rate will be 25%.

The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and can be ambiguous; the Company is, therefore, obliged to make many subjective assumptions and judgments regarding the application of such laws and regulations to its facts and circumstances. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to changes over time. Any changes in the Company's subjective assumptions and judgments could materially affect amounts recognized in its consolidated balance sheets and statements of income.

On August 4, 2014, the Company announced that it received from the Israeli tax authority ("ITA") tax assessments for the years 2010-2012 amounting to NIS 36 million (approximately US$ 10.5 million). Approximately 50% is due to disallowance of various deductions and the remaining balance is due to timing differences of the deduction of certain expenses, which will be deducted in the coming years.

The Company filed an objection with the ITA for the above tax assessments. In July 2015, the Company reached an agreement with the ITA in respect of the above tax assessment according to which there was no significant impact on the Company's provision with respect to prior years.

The Company and a certain Israeli subsidiary have received final tax assessments through the 2012 tax year. One of the subsidiaries in Brazil has received final tax assessments through the 2010 tax year. The other subsidiaries have not yet been assessed since incorporation.

As of December 31, 2016, the Company's non-Israeli subsidiary in the United States has available carry forward foreign tax credits in an amount of approximately US$ 3.6 million. Most of such carry forward tax credits may be utilized until 2022.

The following is reconciliation between the theoretical tax on pretax income, at the applicable Israeli tax rate, and the tax expense reported in the financial statements:

	US dollars
	Year ended December 31,
(in thousands)	2016			2015			2014
Pretax income		50,054			41,833			47,574
Statutory tax rate		25	%		26.5	%		26.5	%
Tax computed at the ordinary tax rate		12,514			11,086			12,607
Nondeductible expenses (income)		766			526			10
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance)		(151	)		831			(304	)
Deductible financial expenses recorded to other comprehensive income		90			(439	)		(365	)
Tax adjustment in respect of different tax rates		2,040			1,411			1,662
Taxes in respect of withholding at the source from royalties and dividends		95			78			615
Adjustment in respect of tax rate deriving from “approved enterprises”		(501	)		(405	)		(558	)
Others		24			(266	)		579
		14,877			12,822			14,246

	US dollars
	Year ended December 31,
(in thousands)	2016		2015
Deferred taxes included in other current assets:
Provision for employee related obligations		166		145
Provision for legal obligation and other		3,868		2,607
		4,034		2,752

	US dollars
	Year ended December 31,
(in thousands)	2016			2015
Long-term deferred income taxes:
Provision for employee related obligations		771			718
Carry forward tax losses and foreign tax credit		3,600			4,321
Temporary differences, net		1,185			1,237
		5,556			6,276
Valuation allowance		(3,276	)		(3,997	)
		2,280			2,279

	US dollars
	Year ended December 31,
(in thousands)	2016		2015
Deferred income taxes included in long-term investments and other assets		2,280		2,279
		2,280		2,279

	US dollars
	Year ended December 31,
(in thousands)	2016		2015		2014
The Company and its Israeli subsidiaries		22,634		23,987		26,021
Non-Israeli subsidiaries		27,420		17,846		21,553
		50,054		41,833		47,574

	US dollars
(in thousands)
Balance at January 1, 2014		472
Translations differences related to the current year		(51	)
Balance at December 31, 2014		421
Decrease related tax positions of prior years		(419	)
Translations differences related to the current year		(2	)
Balance at December 31, 2015		-