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INCOME TAX
 12 Months Ended
Dec. 31, 2023
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)
  
2023
    
2022
    
2021
  
Income taxes (tax benefit):
                  
Current taxes:
                  
In Israel
    
10,202
      
9,110
      
4,916
  
Outside Israel
    
5,997
      
4,711
      
6,954
  
     
16,199
      
13,821
      
11,870
  
Deferred taxes:
                        
In Israel
    
(995
)
    
(102
)
    
(300
)
Outside Israel
    
(2,130
)
    
(634
)
    
(143
)
     
(3,125
)
    
(736
)
    
(443
)
Taxes in respect of prior years:
                        
In Israel
    
10
      
(457
)
    
339
  
Outside Israel
    
271
      
117
      
88
  
     
281
      
(340
)
    
427
  
     
13,355
      
12,745
      
11,854
  
 
  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, 2023, 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, 2023, 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 mentioned 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 2021, 2022 and 2023.
 
  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, 2023, 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)
  
2023
    
2022
    
2021
  
                   
Pretax income
    
64,405
      
52,830
      
48,968
  
Statutory tax rate
    
23
%
    
23
%
    
23
%
Tax computed at the ordinary tax rate
    
14,813
      
12,151
      
11,263
  
Nondeductible expenses (income)
    
(284
)
    
2,123
      
(282
)
Losses and timing differences in respect of which no deferred taxes assets were recognized
    
(557
)
    
1,742
      
446
  
Tax adjustment in respect of different tax rates
    
1,087
      
499
      
1,202
  
Adjustment in respect of tax rate deriving from “approved enterprises”
    
(3,133
)
    
(3,002
)
    
(1,874
)
Tax related to previous years
    
281
      
(340
)
    
427
  
Others
    
1,148
      
(428
)
    
672
  
     
13,355
      
12,745
      
11,854
  
 
  K.
Summary of deferred taxes
 
Composition:
      
       
   
US dollars
  
   
December 31,
  
(in thousands)
  
2023
    
2022
  
             
Deferred taxes
            
Provision for vacation, recreation and bad debt
    
415
      
560
  
Provision for other employee related obligations
    
1,990
      
1,758
  
Provision for deferred revenues/expenses and other obligations
    
6,876
      
4,207
  
Other temporary differences, net
    
4,055
      
3,341
  
     
13,336
      
9,866
  
 
   
US dollars
  
   
December 31,
  
(in thousands)
  
2023
    
2022
  
             
Deferred income taxes included in long-term investments and other assets
    
14,452
      
11,400
  
Deferred income taxes included in long-term liabilities
    
(1,116
)
    
(1,534
)
     
13,336
      
9,866
  
 
  L.
Income before income taxes is composed as follows:
 
   
US dollars
  
   
Year ended December 31,
  
(in thousands)
  
2023
    
2022
    
2021
  
                   
The Company and its Israeli subsidiaries
    
55,316
      
51,562
      
39,594
  
Non-Israeli subsidiaries
    
9,089
      
1,268
      
9,374
  
     
64,405
      
52,830
      
48,968