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INCOME TAX (Tables)

12 Months Ended

Dec. 31, 2019

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)		2019				2018				2017
Income taxes (tax benefit):
Current taxes:
In Israel			6,155				6,622				6,251
Outside Israel			7,674				8,325				10,308
			13,829				14,947				16,559
Deferred taxes:
In Israel			299				781				(1,982	)
Outside Israel			(2,545	)			1,565				(169	)
			(2,246	)			2,346				(2,151	)
Taxes in respect of prior years:
In Israel (*)			439				(20	)			1,775
Outside Israel (**)			212				-				1,522
			651				(20	)			3,297
			12,234				17,273				17,705

(*) During November 2017, the Company has received from the Israeli tax authority ("ITA") tax assessments for the years 2013-2015 amounting to NIS 11.3 million (approximately US$ 3.1 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. Accordingly, 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. In addition, 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 assessment for the years 2012-2014 amounting to BRL 10.3 million (approximately US$ 3.1 million), mainly due to an non-deductible expenses. Accordingly, our subsidiary recorded an amount of BRL 4.8 million (approximately US$ 1.5 million) as tax expense related to prior periods. In addition, 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. Such amount was recognized as part of financing income, net.

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)		2019				2018				2017
Pretax income			23,204				76,233				55,546
Statutory tax rate			23	%			23	%			24	%
Tax computed at the ordinary tax rate			5,337				17,534				13,331
Nondeductible expenses (income)			3,117				(2,785	)			(815	)
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance)			-				(236	)			243
Deductible financial expenses recorded to other comprehensive income			297				(177	)			(113	)
Tax adjustment in respect of different tax rates			3,045				2,384				3,119
Taxes in respect of withholding at the source from royalties and dividends			725				31				542
Adjustment in respect of tax rate deriving from “approved enterprises”			(128	)			(100	)			(436	)
Others			(159	)			622				1,834
			12,234				17,273				17,705

Summary of Deferred Taxes

Composition:

		US dollars
		Year ended December 31,
(in thousands)		2019				2018
Deferred taxes
Provision for vacation, recreation and bad debt			350				258
Provision for legal obligation and other			4,631				5,500
Provision for employee related obligations			1,193				1,147
Carry forward tax losses and foreign tax credit			-				3,600
Temporary differences, net			1,344				(1,360	)
			7,518				9,145
Valuation allowance			-				(3,476	)
			7,518				5,669

		US dollars
		Year ended December 31,
(in thousands)		2019				2018
Deferred income taxes included in long-term investments and other assets			10,385				12,127
Deferred income taxes included in long-term liabilities			(2,867	)			(6,458	)
			7,518				5,669

Schedule of Income Before Income Taxes

Income before income taxes is composed as follows:

		US dollars
		Year ended December 31,
(in thousands)		2019				2018				2017
The Company and its Israeli subsidiaries			27,045				46,138				22,138
Non-Israeli subsidiaries			(3,841	)			30,095				33,408
			23,204				76,233				55,546

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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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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 income before income tax between domestic and foreign jurisdictions.

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