XML 40 R24.htm IDEA: XBRL DOCUMENT
v3.21.1

TAXES ON INCOME | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
TAXES ON INCOME |
NOTE 17 - | TAXES ON INCOME
| a. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 ("the Law"):
Until December 31, 2010, TAT and Turbochrome has elected to participate in the alternative package of tax benefits for its approved and benefited enterprise under the law. Pursuant to such Law, the income derived from those enterprises will be exempt from Israeli corporate tax for a specified benefit period (except to the extent that dividends are distributed during the tax-exemption period other than upon liquidation) and subject to reduced corporate tax rates for an additional period. In the event of distribution of a dividend from income which was tax exempt as above, the company would have to pay a regular corporate tax rate in respect of the amount distributed. Preferred Enterprises Additional amendments to the Law became effective in January 2011 (the “2011 Amendment”). Under the 2011 Amendment, income derived by ‘Preferred Companies’ from ‘Preferred Enterprises’ (both as defined in the 2011 Amendment) would be subject to a uniform rate of corporate tax as opposed to the incentives that are limited to income from Approved or Benefiting Enterprises during their benefits period. According to the 2011 Amendment, the uniform tax rate on such income, referred to as ‘Preferred Income’, would be 6% in areas in Israel that are designated as Development Zone A and 12% elsewhere in Israel. Dividends distributed from taxable income derived from Preferred Enterprise would be subject to a 15% tax (or lower, if so provided under an applicable tax treaty), which would generally be withheld by the distributing company .While the Company may incur additional tax liability in the event of distribution of dividends from tax exempt income generated from its Approved and Benefiting Enterprises, no additional tax liability will be incurred by the Company in the event of distribution of dividends from income taxed in accordance with the 2011 Amendment Under the transitional provisions of the 2011 Amendment, the Company elected to irrevocably implement the 2011 Amendment, commencing 2011 and thereafter, and be regarded as a "Preferred Enterprise" with respect to its existing Approved and Benefited Enterprises while waiving benefits provided under the legislation prior to the 2011 Amendment. Under a recent amendment, announced in August 2013, beginning in 2014, dividends paid out of income attributed to a Preferred Enterprise will be subject to a withholding tax rate of 20% (instead of 15%). In addition, tax rates under the Preferred Enterprise were also raised effective as of January 1, 2014 to 9% in Zone A and 16%. The uniform tax rate for Development Zone A, as of January 1, 2017, is 7.5% (as part of changes enacted in Amendment 73). TAT is located in an area in Israel that is designated as elsewhere and as such entitled to reduce tax rates of 16%. Turbochrome is in an area in Israel that is designated as Zone A and as such entitled to reduce tax rates of 7.5%.
| b. | Corporate tax rate in Israel
The taxable income of TAT, not subject to benefits as detailed above, is taxed at the standard Israeli corporate tax rate, which was 23% for all years included in these financial statements. Capital gain is subject to capital gain tax according to corporate tax rate in the year which the assets are sold
| c. | U.S. subsidiaries
U.S. subsidiaries are taxed based on federal and state tax laws. The Federal statutory tax rate for 2020, 2019 and 2018 was 21% plus 3%-6% for state taxes.
| d. | Tax assessments
TAT’s income tax assessments are considered final through 2015.
|  | Turbochrome income tax assessments are considered final through 2015.
|  | Limco-Piedmont income tax assessments are considered final through 2016.
| e. | Income tax reconciliation:
A reconciliation of the theoretical tax expense assuming all income is taxed at the statutory rate to taxes on income (tax benefit) as reported in the statements of income:
|  | Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Income (loss) before taxes on income (tax benefit) from continued operationas reported in the statements of income |  | $ | (4,816 | ) |  | $ | 2,182 |  |  | $ | (5,252 | )
Statutory tax rate in Israel |  |  | 23 | % |  |  | 23 | % |  |  | 23 | %
Theoretical taxes on income (tax benefit) |  | $ | (1,108 | ) |  | $ | 501 |  |  | $ | (1,207 | )
Increase (decrease) in taxes on income resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax adjustment for foreign subsidiaries subject to a different tax rate |  |  | 50 |  |  |  | (26 | ) |  |  | (9 | )
Reduced tax rate on income derived from "Preferred Enterprises" plans |  |  | 580 |  |  |  | 204 |  |  |  | 346 |
Earnings from foreign subsidiaries (1) |  |  | (2,338 | ) |  |  | 91 |  |  |  | (338 | )
Valuation allowance for exchange rates differences on deferred taxes not recorded on capital losses |  |  | - |  |  |  | (125 | ) |  |  | (42 | )
Deferred tax assets from discontinued operation loss |  |  | (138 | ) |  |  | (49 | ) |  |  | (36 | )
Reduced deferred tax asset from expecting utilization of carryforward losses |  |  | 1,984 |  |  |  | - |  |  |  | - |
Tax in respect of prior years |  |  | (345 | ) |  |  | - |  |  |  | (481 | )
Temporary differences for which no deferred taxes were recorded |  |  | (377 | ) |  |  | (55 | ) |  |  | 8 |
Permanent differences |  |  | 24 |  |  |  | 55 |  |  |  | 245 |
Other adjustments |  |  | 151 |  |  |  | (7 | ) |  |  | 50 |
Taxes on income (tax benefit) as reported in the statements of income |  | $ | (1,517 | ) |  | $ | 589 |  |  | $ | (1,464 | )
(1)  The Company record an accrual that related to a deferred tax liability due to the possibility of future distribution of earnings from foreign subsidiaries of the Company. During 2020, the Company received loans from commercial banks in the US and Israel. As part of the loan terms, the company cannot distribute dividends to its shareholders during the next five years. Therefore, the company wrote off the differed tax liability.
| f. | Income (loss) before taxes on income (tax benefit) is comprised as follows:
|  | Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Domestic (Israel) |  | $ | (4,499 | ) |  | $ | (1,931 | ) |  | $ | (4,781 | )
Foreign (United States) |  |  | (317 | ) |  |  | 4,113 |  |  |  | (471 | )
|  | $ | (4,816 | ) |  | $ | 2,182 |  |  | $ | (5,252 | )
| g. | Taxes on income (tax benefit) included in the statements of income:
|  | Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |
Domestic (Israel) |  | $ | - |  |  | $ | - |  |  | $ | - |
Foreign (United States) |  |  | - |  |  |  | 181 |  |  |  | (881 | )
|  |  | - |  |  |  | 181 |  |  |  | (881 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Domestic (Israel) |  |  | (683 | ) |  |  | (397 | ) |  |  | (813 | )
Foreign (United States) |  |  | (489 | ) |  |  | 805 |  |  |  | 711 |
|  |  | (1,172 | ) |  |  | 408 |  |  |  | (102 | )
Previous years: |  |  |  |  |  |  |  |  |  |  |  |
Domestic (Israel) |  |  | (134 | ) |  |  |  |  |  |  |  |
Foreign (United States) |  |  | (211 | ) |  |  | - |  |  |  | (481 | )
|  |  | (345 | ) |  |  | - |  |  |  | (481 | )
|  | $ | (1,517 | ) |  | $ | 589 |  |  | $ | (1,464 | )
| h. | Deferred income taxes:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of TAT's deferred tax liabilities and assets are as follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |
Provision for current expected credit losses |  | $ | 41 |  |  | $ | 67 |
Provisions for employee benefits |  |  | 272 |  |  |  | 470 |
Inventory |  |  | 987 |  |  |  | 964 |
Intangible assets |  |  | - |  |  |  | 42 |
Capital tax losses carryforward |  |  | 3,500 |  |  |  | 3,500 |
Net operating losses carryforward |  |  | 3,017 |  |  |  | 1,669 |
Other |  |  | 224 |  |  |  | 96 |
Deferred tax assets, before valuation allowance |  | $ | 8,041 |  |  | $ | 6,808 |
Valuation allowance |  |  | (5,484 | ) |  |  | (3,500 | )
Deferred tax assets, net |  | $ | 2,557 |  |  | $ | 3,308 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | (1,647 | ) |  |  | (2,159 | )
Intangible assets |  |  | (318 | ) |  |  | - |
Earnings from foreign subsidiaries (1) |  |  | - |  |  |  | (1,953 | )
Other temporary differences deferred tax liabilities |  |  | (26 | ) |  |  | (68 | )
Deferred tax liabilities |  | $ | (1,991 | ) |  | $ | (4,180 | )
Net |  | $ | 566 |  |  | $ | (872 | )
| (1) | The Company record an accrual that related to a deferred tax liability due to the possibility of future distribution of earnings from foreign subsidiaries of the Company. During 2020, the Company received loans from commercial banks in the US and Israel. As part of the loan terms, the company cannot distribute dividends to its shareholders during the next five years. Therefore, the company wrote off the differed tax liability.
The following table summarizes the changes in the valuation allowance for deferred tax assets:
Balance, December 31, 2017 |  |  | 3,417 |
Additions during the year |  |  | (42 | )
Balance, December 31,2018 |  | $ | 3,375 |
Deductions during the year |  |  | 125 |
Balance, December 31,2019 |  | $ | 3,500 |
Additions during the year |  |  | 1,984 |
Balance, December 31,2020 |  | $ | 5,484 |
Valuation allowance are mainly related to (i) U.S. subsidiary for which valuation allowance was provided in respect of deferred tax assets resulting from carryforward of State tax losses in the amount of $ 1,519. That amount is expected to expire gradually starting from 2024 and (ii) Capital losses attributed to the Company in the amount of $ 1,502. (iii) corporate income tax losses carryforward incurred in TAT Gedera in amount of $1,984. TAT does not intend to distribute tax-exempt earnings deriving from its Approved Enterprise aggregating approximately $2,087 as of December 31, 2020, and accordingly, no deferred tax liability has been established related to these earnings. If such tax-exempt income is distributed, it would be taxed at the regular corporate tax rate applicable to such profits (23%) and an income tax liability of up to approximately $480 would be incurred as of December 31, 2020.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration