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INCOME TAX (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of Components of Income Taxes

Taxes on income included in the statements of income:

		US dollars
		Year ended December 31,
(in thousands)		2017				2016				2015
Income taxes (tax benefit):
Current taxes:
In Israel			6,251				5,581				6,279
Outside Israel			10,308				10,303				6,089
			16,559				15,884				12,368
Deferred taxes:
In Israel			(1,982	)			91				(121	)
Outside Israel			(169	)			(1,179	)			206
			(2,151	)			(1,088	)			85
Taxes in respect of prior years:
In Israel (*)			1,775				81				369
Outside Israel (**)			1,522				-				-
			3,297				81				369
			17,705				14,877				12,822

(*) During November 2017, the Company has received from the Israeli tax authority ("ITA") tax assessments for the years 2013-2015 amounting to approximately NIS 11 million (approximately US$ 3 million). An amount of NIS 7.2 million (approximately US$ 2 million) due to the timing differences related to the deduction of certain expenses for tax purposes, which was agreed to be deducted in the coming years. The Company recorded an amount of NIS 6.2 million (approximately US$ 1.8 million) as tax expense related to prior periods and a deferred tax benefit in a similar amount. As part of the above tax assessment, the Company was required to pay the ITA an amount of NIS 1.8 million (approximately US$ 0.5 million) as interest expense. Such amount was recognized as part of financing income, net.

(**)During November 2017, one of our subsidiaries in Brazil has received from the Brazilian tax authority ("RFB") a tax assessments for the years 2012-2014 amounting to BRL 10.3 million (approximately US$ 3.1 million), mainly due to an undetectable expenses. Accordingly, our subsidiary recorded an amount of BRL 4.8 million (approximately US$ 1.5 million) as tax expense related to prior periods. As part of the above tax assessment our subsidiary was required to pay an amount of BRL 3.6 million (approximately US$ 1.1 million) as penalty and BRL 1.7 (approximately US$ 0.5 million) as interest expense.

Schedule of Income Tax Reconciliation

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)		2017				2016				2015
Pretax income			55,546				50,054				41,833
Statutory tax rate			24	%			25	%			26.5	%
Tax computed at the ordinary tax rate			13,331				12,514				11,086
Nondeductible expenses (income)			(815	)			766				526
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance)			243				(151	)			831
Deductible financial expenses recorded to other comprehensive income			(113	)			90				(439	)
Tax adjustment in respect of different tax rates			3,119				2,040				1,411
Taxes in respect of withholding at the source from royalties and dividends			542				95				78
Adjustment in respect of tax rate deriving from “approved enterprises”			(436	)			(501	)			(405	)
Others			1,834				24				(266	)
			17,705				14,877				12,822

Summary of Deferred Taxes

Composition:

		US dollars
		Year ended December 31,
(in thousands)		2017				2016
Deferred taxes
Provision for employee related obligations			276				166
Provision for legal obligation and other			6,262				3,868
Provision for employee related obligations			849				771
Carry forward tax losses and foreign tax credit			3,600				3,600
Temporary differences, net			887				1,185
			11,874				9,590
Valuation allowance			(3,476	)			(3,276	)
			8,398				6,314

Schedule of Income Before Income Taxes

Income before income taxes is composed as follows:

		US dollars
		Year ended December 31,
(in thousands)		2017				2016				2015
The Company and its Israeli subsidiaries			22,138				22,634				23,987
Non-Israeli subsidiaries			33,408				27,420				17,846
			55,546				50,054				41,833

Changes in Unrecognized Tax Benefits

Reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)		US dollars
Balance at January 1, 2015			421
Decrease related tax positions of prior years			(419	)
Translations differences related to the current year			(2	)
Balance at December 31, 2017, 2016 and 2015

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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-Publisher FASB
-Name Accounting Standards Codification
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the change in unrecognized tax benefits.

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