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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Tax rates applicable to the Company The taxable income of Israeli company is subject to a corporate tax rate of 23% for the years 2024, 2023 and 2022. The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity. Loss before taxes is comprised as follows:
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
Domestic (Israel) | $ | (113,276) |  |  | $ | (107,889) |  |  | $ | (109,088) |
Foreign | 3,585 |  |  | (7,679) |  |  | 3,416 |
Total | $ | (109,691) |  |  | $ | (115,568) |  |  | $ | (105,672) |
Reconciliation of the theoretical tax expense (benefit) to the actual tax expense (benefit) The main reconciling items between the statutory tax rate of the Company and the effective tax rate are the non-recognition of tax benefits from accumulated net operating loss carryforward of the Company due to the uncertainty of the realization of such tax benefits and the reversal of uncertain tax positions accrual in the period. 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. The Company’s deferred tax assets are comprised of operating loss carryforward and other temporary differences. NOTE 12. INCOME TAXES (cont.) The following table presents the significant components of the Company’s deferred tax assets and liabilities:
| December 31, 2024 |  | December 31, 2023
Deferred tax assets: |  |  |
Operating loss carryforward | $ | 73,665 |  |  | $ | 55,189 |
Share based compensation | 94,527 |  |  | 94,807 |
Research and development | 15,449 |  |  | 18,614 |
Accrued social benefits and other | 559 |  |  | 573 |
Other costs | 442 |  |  | 202 |
Operating lease liability | 4,085 |  |  | 4,348 |
Deferred tax asset before valuation allowance | $ | 188,727 |  |  | $ | 173,733 |
Valuation allowance | (182,851) |  |  | (164,848) |
Total deferred tax assets | $ | 5,876 |  |  | $ | 8,885 |
Property and equipment, net | (2,923) |  |  | (3,166) |
Operating lease right-of-use asset | (4,735) |  |  | (5,108) |
Deferred tax liabilities | $ | (7,658) |  |  | $ | (8,274) |
Net deferred taxes | $ | (1,782) |  |  | $ | 611 |
Management currently believes that because the Company and its subsidiaries have a history of losses on a consolidated basis it is more likely than not that the deferred tax regarding the loss carry forward and other temporary differences will not be realized in the foreseeable future. The net changes in the total valuation allowance for each of the years ended December 31, 2024 and 2023, are comprised as follows:
| December 31, 2024 |  | December 31, 2023
Opening balance | $ | 164,848 |  |  | $ | 144,444 |
Additions during the year | 18,003 |  |  | 20,404 |
Ending balance | $ | 182,851 |  |  | $ | 164,848 |
Income taxes are comprised as follows:
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
Current | $ | (330) |  |  | $ | (749) |  |  | $ | 1,748 |
Deferred | 2,393 |  |  | (611) |  |  | — |
| $ | 2,063 |  |  | $ | (1,360) |  |  | $ | 1,748 |
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
Domestic | $ | 84 |  |  | $ | 92 |  |  | $ | 136 |
Foreign | 1,979 |  |  | (1,452) |  |  | 1,612 |
| $ | 2,063 |  |  | $ | (1,360) |  |  | $ | 1,748 |
NOTE 12. INCOME TAXES (cont.) Uncertain tax positions A reconciliation of the opening and closing amounts of total unrecognized tax benefits is as follows:
| December 31, 2024 |  | December 31, 2023
Opening balance | $ | 685 |  |  | $ | 1,726 |
Tax positions reversed in current year related to previous years | (685) |  |  | (1,315) |
Tax positions taken in current year | — |  |  | 240 |
Accrued interest | — |  |  | 34 |
Ending Balance | $ | — |  |  | $ | 685 |
Substantially all the balance of unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate. The Company recognizes interest and penalties, if any, related to unrecognized tax positions in income tax expense. The Company believes that its income tax filing positions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Tax assessments The Company has subsidiaries around the world subject to tax in the jurisdictions in which they operate. The significant jurisdictions in which the Company’s subsidiaries are subject to tax are Israel, the U.S, and the U.K. Income tax returns are open for examination for the tax years 2020-2024 in Israel, 2015-2024 in the U.S., and 2021-2024 in the U.K. As a global organization, the Company may be subject to a variety of transfer pricing challenges by taxing authorities in various jurisdictions. While management believes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from tax examinations for all open tax years, the completion of tax examinations for open years may result in changes to the amounts recognized in the consolidated financial statements. Net operating loss carryforward As of December 31, 2024, the Company and its subsidiaries had net operating carry forward losses for tax purposes which may be carried forward and offset against taxable income in the future for an indefinite period.
Name of Subsidiary | Net Operating Loss Carryforwards
REE Automotive Ltd | $ | 316,718 |
REE Automotive UK Limited | $ | 3,228 |
REE Automotive USA Inc. | $ | 6 |
REE Automotive Japan K.K. | $ | 60 |

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