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INCOME TAXES | 12 Months Ended
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Dec. 31, 2014
INCOME TAXES [Abstract] |
INCOME TAXES |
NOTE 20 | - | INCOME TAXES
| A. | Approved Enterprise Status
Substantially all of Tower's existing facilities and other capital investments have been granted approved enterprise status, as provided by the Investments Law. Pursuant to the Investments Law and the approval certificates, Tower's income is taxed at a rate of 20% in 2014. The portion of Tower's taxable income that is not attributable to approved enterprise status is taxed at a rate of 26.5% in 2014 (“Regular Company Tax”). The tax benefits are also conditioned upon fulfillment of the requirements stipulated by the letter of approval regarding Tower's facilities and other capital investments' approved enterprise status (“Ktav Ishur”), as well as by the Investments Law and the regulations promulgated thereunder, as well as the criteria set forth in the certificates of approval. In the event of a failure by Tower to comply with these conditions, the tax benefits could be canceled, in whole or in part, and Tower would be required to refund the amount of the canceled benefits, plus interest and certain inflation adjustments. In the Company's opinion, Tower has been in compliance with the conditions through the approval date of the financial statements; See Note 8B.
| B. | The company's Income Tax provision is as follows
|  |  | Year Ended |
|  |  | December 31, 2014 |  |  | December 31, 2013 |  |  | December 31, 2012 |
| Current tax expense (benefit): |  |  |  |  |  |  |  |  |
| Foreign |  | $ | 2,814 |  |  | $ | (534 | ) |  | $ | (1,800 | )
| Total current |  |  | 2,814 |  |  |  | (534 | ) |  |  | (1,800 | )
| Deferred tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
| Foreign |  |  | (27,556 | ) |  |  | (8,854 | ) |  |  | 9,126 |
| Total deferred |  |  | (27,556 | ) |  |  | (8,854 | ) |  |  | 9,126 |
| Income tax provision (benefit) |  | $ | (24,742 | ) |  | $ | (9,388 | ) |  | $ | 7,326 |
|  | Year Ended |
|  | December 31, 2014 |  |  | December 31, 2013 |  |  | December 31, 2012 |
Profit (loss) before taxes |  |  |  |  |  |  |  |  |
Domestic |  | $ | 78,677 |  |  | $ | (90,497 | ) |  | $ | (83,049 | )
Foreign |  |  | (104,791 | ) |  |  | (26,551) |  |  |  | 20,106 |
Total income (loss) before taxes |  | $ | (26,114 | ) |  | $ | (117,048 | ) |  | $ | (62,943 | )
| C. | Components of Deferred Tax Asset/Liability
The following is a summary of the components of the deferred tax benefit and liability reflected on the balance sheets as of the respective dates:
|  | As of December 31, |
|  | 2014 |  |  | 2013 |
Net deferred tax benefit - current |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 938 |  |  | $ | 2,026 |
Employees benefits and compensation |  |  | 5,170 |  |  |  | 4,003 |
Debt discount |  |  | 1,253 |  |  |  |  |
Accruals, reserves and others |  |  | 3,809 |  |  |  | 2,760 |
|  |  | 11,170 |  |  |  | 8,789 |
Valuation allowance |  |  | (3,354 | ) |  |  | (2,779 | )
Total net current deferred tax benefit |  | $ | 7,816 |  |  | $ | 6,010 |
|  | As of December 31, |
|  | 2014 |  |  | 2013 |
Net deferred tax benefit - long-term |  |  |  |  |  |
Deferred tax assets - |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 320,954 |  |  | $ | 284,446 |
Employees benefits and compensation |  |  | 2,663 |  |  |  | 4,605 |
Research and development |  |  | 1,940 |  |  |  | 2,005 |
Others |  |  | 1,237 |  |  |  | 1,212 |
|  |  | 326,794 |  |  |  | 292,268 |
Valuation allowance |  |  | (293,670 | ) |  |  | (255,899 | )
|  | $ | 33,124 |  |  | $ | 36,369 |
Deferred tax liability - depreciation and amortization |  |  | (30,293 | ) |  |  | (41,255 | )
Deferred tax related to gain on acquisition |  |  | (66,722 | ) |  |  | -- |
Intangible assets |  |  | (6,318 | ) |  |  | (6,929 | )
Debt discount |  |  | (4,200 | ) |  |  | (884 | )
Others |  |  | (869 | ) |  |  | (912 | )
Total net long-term deferred tax liability |  | $ | (75,278 | ) |  | $ | (13,611 | )
Deferred tax asset in the amounts of $7,816 and $6,010 as of December 31, 2014 and 2013, respectively are presented in other current assets. Deferred tax liability in the amounts of $75,278 and $13,611 as of December 31, 2014 and 2013, respectively, are presented in deferred tax liability. The Company establishes a valuation allowance for deferred tax assets, when it is unable to conclude that it is more likely than not that such deferred tax assets will be realized. In making this determination, the Company evaluates both positive and negative evidence. Jazz's state deferred tax assets exceed the reversal of taxable temporary differences. Without other significant positive evidence, Jazz has determined that the state deferred tax assets are not more likely than not to be realized and Tower has determined that its deferred tax assets are not more likely than not to be realized during the coming years. On December 31, 2014 and 2013, the Company recorded a valuation allowance against its deferred tax assets in the amounts of $297,024 and $258,678, respectively, to offset the related net deferred tax assets as the Company is unable to conclude that it is more likely than not that such deferred tax assets will be realized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Unrecognized tax benefits |
Balance at January 1, 2014 |  | $ | 25,676 |
Additions for tax positions of current year |  |  | 51 |
Reductions for tax positions of prior year |  |  | -- |
Translation differences |  |  | (766 | )
Balance at December 31, 2014 |  | $ | 24,961 |
|  | Unrecognized tax benefits |
Balance at January 1, 2013 |  | $ | 27,414 |
Additions for tax positions of current year |  |  | 12 |
Reductions for tax positions of prior year |  |  | (371 | )
Translation differences |  |  | (1,379 | )
Balance at December 31, 2013 |  | $ | 25,676 |
|  | Unrecognized tax benefits |
Balance at January 1, 2012 |  | $ | 32,377 |
Reductions for tax positions of prior year |  |  | (275 | )
Translation differences |  |  | (719 | )
Settlements |  |  | (3,969 | )
Balance at December 31, 2012 |  | $ | 27,414 |
The statute of limitation with respect to Jazz's tax year 2010 is expected to expire in March 2015, unless further extended by the US tax authorities. The expiration of the statute of limitation will result in cancelation of the respective unrecognized tax benefit for such year in the amount of approximately $11,000 The Company accounts for its uncertain tax provisions in accordance with ASC 740. The Company's policy is to recognize interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits as a component of income tax expense.
| D. | Effective Income Tax Rates
The reconciliation of the statutory tax rate to the effective tax rate is as follows:
|  | Year ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Tax expense (benefit) computed at statutory rates |  | $ | (6,920 | ) |  | $ | (29,262 | ) |  | $ | (15,736 | )
Effect of different tax rates in different jurisdictions |  |  | (18,453 | ) |  |  | 1,408 |  |  |  | 7,514 |
Gain on acquisition of TPSCo |  |  | (33,280 | ) |  |  |  |  |  |  |  |
Tax benefits for which deferred taxes were not recorded |  |  | 27,757 |  |  |  | 20,139 |  |  |  | 15,955 |
Permanent differences and other, net |  |  | 6,154 |  |  |  | (1,673 | ) |  |  | (407 | )
Income tax provision (benefit) |  | $ | (24,742 | ) |  | $ | (9,388 | ) |  | $ | 7,326 |
| E. | Net Operating Loss Carry forward
On December 31, 2014, Tower had net operating loss carry forwards for tax purposes of approximately 1.4 billion USD which may be carried forward for an unlimited period of time. The future utilization of Jazz's net operating loss carry forwards to offset future taxable income is subject to an annual limitation as a result of ownership changes that have occurred. Additional limitations could apply if ownership changes occur in the future. Jazz has had two “change in ownership” events that limit the utilization of net operating loss carry forwards. The first “change in ownership” event occurred in February 2007 upon Jazz Technologies' acquisition of Jazz Semiconductor. The second “change in ownership” event occurred on September 19, 2008, upon Tower's acquisition of Jazz. Jazz concluded that the net operating loss limitation for the change in ownership which occurred in September 2008 will be an annual utilization of approximately $2,100 for the use in its tax return. On December 31, 2014, Jazz had federal net operating loss carry forwards of approximately $31,000 that will begin to expire in 2022, unless previously utilized. On December 31, 2014, Jazz had state net operating loss carry forward of approximately $141,000. The state tax loss carry forwards is expected to start expiring from 2015 onwards. At December 31, 2014, TJP had net operating loss carry forwards of approximately $9,000 which are expected to expire in 2015 following the decision to cease TJP operations. At December 31, 2014, TPSCo had operating loss carry forwards of approximately $12,000 which are expected to expire in 2023.
| F. | Final Tax Assessments
Tower possesses final tax assessments through the year 1998. In addition, the tax assessments for the years 1999-2010 are deemed final. Jazz and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. In 2013, the U.S. tax authorities commenced an audit of Jazz's 2011 tax returns, and asked Jazz for certain reports and data in connection with said year's tax returns. During September 2014, Jazz received correspondence from the U.S tax authorities that they accepted the 2011 federal tax returns as filed without any audit adjustments. Jazz is no longer subject to U.S. federal income tax examinations for years before 2010; state and local income tax examinations before 2010; and foreign income tax examinations before 2011. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carry forward amount. TJP was established in June 2011 and does not have final tax assessments. TPSCo was established in March 2014 and has not yet filed any annual tax report.

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- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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