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INCOME TAX
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAX
NOTE 15
 		 -
 		 INCOME TAX
  A.
Taxes on income included in the statements of income:
 
   
US dollars
  
   
Year ended December 31,
  
(in thousands)
  
2022
    
2021
    
2020
  
Income taxes (tax benefit):
                  
Current taxes:
                  
In Israel
    
9,110
      
4,916
      
5,841
  
Outside Israel
    
4,711
      
6,954
      
4,341
  
     
13,821
      
11,870
      
10,182
  
Deferred taxes:
                        
In Israel
    
(102
)
    
(300
)
    
(553
)
Outside Israel
    
(634
)
    
(143
)
    
(1,605
)
     
(736
)
    
(443
)
    
(2,158
)
Taxes in respect of prior years:
                        
In Israel
    
(457
)
    
341
      
(*)2,751
  
Outside Israel
    
117
      
86
      
81
  
     
(340
)
    
427
      
2,832
  
     
12,745
      
11,854
      
10,856
  
 
  (*)
During November 2020, the Company has received tax assessments from the Israeli tax authority ("ITA") for the years 2016-2018 amounting to approximately NIS 13 million (approximately US$4 million). An amount of approximately NIS 6 million (approximately US$2 million) due to timing differences (this amount was claimed by the Company in its tax filings for the years ended December 31, 2019, 2020 and 2021) related to the deduction of certain expenses for tax purposes. The Company had reached, in November 2020, an agreement with ITA that these amounts will be deducted only during the years 2019-2022. Accordingly, the Company recorded tax expenses in the amount of NIS 9 million (approximately US$3 million) in respect of prior periods, and simultaneously recorded a deferred tax benefit in a similar amount. In addition, the Company was required to pay ITA an amount of NIS 2 million (approximately US$0.6 million) as interest expense. Such amount was recognized as part of financing income, net.
 
  B.
Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (the “Inflationary Adjustment Law”)
 
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 ("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.
 
  C.
The Law for the Encouragement of Capital Investments, 1959 (the "Investment Law")
 
  1.
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 located in areas other than Development Zone A. remained unchanged at 16%). The Economic Efficiency Law also outlined new benefit tracks for preferred technology enterprises.

 
 
  2.
As of December 31, 2022, one Israeli subsidiary (located in areas other than Development Zone A) is entitled to a "Preferred Company " status pursuant to the investment law and subject to 16% corporate tax rate.
 
  D.
The Law for the Encouragement of Capital Investments, 1959, under the 2016 amendment (the "Investment Law")
 
  1.
In December 2016 new legislation amended the Investments Law (the "2016 amendment"). Under the 2016 amendment a new status of "Technological Preferred Enterprise" was introduced to the Investment Law.
 
Technological Preferred Enterprise – an enterprise which, amongst other condition, is part of a consolidated Company with consolidated revenues of less than NIS 10 billion. A Technological Preferred Enterprise which is located in areas other than Development Zone A will be subject to a tax rate of 12% on profits derived from intellectual property, and a Technological Preferred Enterprise in Development Zone A will be subject to tax rate at a 7.5%.
 
  2.
As of December 31, 2022, two Israeli subsidiaries (located in areas other than Development Zone A) are entitled to a "Technological Preferred Enterprise" status pursuant to the investment (under the 2016 amendment) law and subject to 12% corporate tax rate. Income not eligible for Technological Preferred Enterprise is taxed at the regular corporate tax rate or at the preferred tax rate as mention in Note C1 above, as the case may be.
 
  E.
Israeli corporate tax rates
 
Taxable income of the Company and its Israeli subsidiaries (that are not entitled to special tax rates as described above) is subject to a corporate tax rate of 23% in 2020, 2021 and 2022.
 
  F.
Non-Israeli subsidiaries
 
Non-Israeli subsidiaries are taxed according to the tax laws and rates in their country of residence.
 
  G.
Use of assumptions and judgments
 
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.
 
  H.
Tax assessments
 
The Company and certain Israeli subsidiary have received final tax assessments through the 2018, One of the subsidiaries in Brazil has received final tax assessments through the 2015 tax year. The other subsidiaries have not yet been assessed since incorporation.
 
  I.
Carry forward foreign tax credits and tax losses
 
As of December 31, 2022, there are no losses carried forward that are likely to be used in the near future.

 
  J.
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)
  
2022
    
2021
    
2020
  
Pretax income
    
52,830
      
48,968
      
29,039
  
Statutory tax rate
    
23
%
    
23
%
    
23
%
Tax computed at the ordinary tax rate
    
12,151
      
11,263
      
6,679
  
Nondeductible expenses (income)
    
2,123
      
(282
)
    
2,220
  
Losses and timing differences in respect of which no deferred taxes assets were recognized
    
1,742
      
446
      
423
  
Tax adjustment in respect of different tax rates
    
499
      
1,202
      
753
  
Adjustment in respect of tax rate deriving from “approved enterprises”
    
(3,002
)
    
(1,874
)
    
(1,583
)
Tax related to previous years
    
(340
)
    
427
      
2,832
  
Others
    
(428
)
    
672
      
(468
)
     
12,745
      
11,854
      
10,856
  
 
  K.
Summary of deferred taxes
     
   

Composition:
 
   
US dollars
  
   
December 31,
  
(in thousands)
  
2022
    
2021
  
Deferred taxes
            
Provision for vacation, recreation and bad debt
    
560
      
1,697
  
Provision for other employee related obligations
    
1,758
      
1,362
  
Provision for deferred revenues/expenses and other obligations
    
4,207
      
3,963
  
Other temporary differences, net
    
3,341
      
2,117
  
     
9,866
      
9,139
  
 
   
US dollars
  
   
December 31,
  
(in thousands)
  
2022
    
2021
  
             
Deferred income taxes included in long-term investments and other assets
    
11,400
      
11,091
  
Deferred income taxes included in long-term liabilities
    
(1,534
)
    
(1,952
)
     
9,866
      
9,139
  

 

  L.
Income before income taxes is composed as follows:

 
   
US dollars
  
   
Year ended December 31,
  
(in thousands)
  
2022
    
2021
    
2020
  
The Company and its Israeli subsidiaries
    
51,562
      
39,594
      
38,469
  
Non-Israeli subsidiaries
    
1,268
      
9,374
      
(9,430
)
     
52,830
      
48,968
      
29,039