The Company’s US subsidiary, Chemomab Therapeutics Inc. ("Chemomab Inc.) is taxed separately under the U.S. tax laws.

Chemomab Inc. is subject to a federal flat tax rate of 21% and state tax as applicable.

Capital gain is subject to capital gain tax according to the corporate tax rate in the year the assets are sold.

As of December 31, 2021, the Company’s tax reports through December 31, 2016 are considered closed to audit inspections by the Israeli Tax Authority (“ITA”) due to statute of limitation rules effective in Israel.

As of December 31, 2021, the Company and its subsidiaries had approximately $143 million (approximately $21 million as of December 31, 2020) of net operating loss carryforwards which are available to reduce future taxable income with no limitation on the period of use.

F - 21

Chemomab Therapeutics Ltd. and its subsidiaries

Notes to the Financial Statements as at December 31, 2021

Note 11 - Income Taxes (cont’d)

D.Deferred taxes

In respect of:

	December 31,			December 31,
	2021			2020
	USD thousands			USD thousands
Net operating loss carry-forwards		33,396			4,874
Share-based compensation expense		1,147			57
Research and development costs		1,449			1,244
Other		38			25
Gross deferred tax assets		36,030			6,200
Less - Valuation allowance		(36,030	)		(6,200)

Net deferred tax assets		-			-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized.

The Company has established a valuation allowance to offset deferred tax assets on December 31, 2021 and 2020 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The net change in the total valuation allowance for the year ended at December 31, 2021 was an increase of approximately USD 2.6 million.

E.Roll forward of valuation allowance

Balance at January 1, 2020	$	4,248
Currency transaction loss		583
Income tax expense		1,369
Balance at December 31, 2020	$	6,200
Currency transaction loss		2,425
Tax assets acquired through merger		24,535
Income tax expense		2,870
Balance at December 31, 2021	$	36,030

F - 22

Chemomab Therapeutics Ltd. and its subsidiaries

Notes to the Financial Statements as at December 31, 2021

Note 11 - Income Taxes (cont’d)

F.Reconciliation of theoretical income tax expense to actual income tax expense

A reconciliation of the Company’s theoretical income tax expense to actual income tax expense is as follows:

	December 31,			December 31,
	2021			2020
	USD thousands			USD thousands
Loss before income taxes		(12,478	)		(5,951	)
Statutory tax rate		23	%		23	%
Theoretical tax benefit		(2,870	)		(1,369	)

Losses and other items for which a valuation allowance was provided or benefit from loss carryforwards		2,870			1,369

Actual income tax expense		-			-

G.Accounting for uncertainty in income taxes

For the year ended December 31, 2021, the Company did not have any unrecognized tax benefits and does not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months. The Company’s accounting policy is to accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense.